Without adequate health care, no one can make full use of his or her talents and opportunities. It is thus just as important that economic, racial and social barriers not stand in the way of good health care as it is to eliminate those barriers to a good education and a good job.

— President Nixon

On February 6, 1974, President Nixon presented his Comprehensive Health Insurance Plan, or CHIP, to Congress in an effort to outline and define his intentions for a health care reform program that would go into effect in 1976. At the beginning of his report, he explains that overall healthcare costs have risen over 20% since 1971, and that the standing average cost of a day-long hospital stay is over $110. On top of the rising cost of healthcare, over 25 million Americans were still uninsured in 1974. 40% of Americans who were insured were not covered for visits to a physician’s office on an outpatient basis, and very few private health care policies covered preventative services. Furthermore, less than half of Americans under the age of 65 and almost none of Americans over the age of 65 had major medical health coverage.

Nixon’s plan was designed to ensure that doctors were incentivized to work for their patient, not for the federal government or insurance companies. CHIP required no new federal taxes as all parties – consumer, provider, insurer, state government and federal government – had a direct stake in making this system work. There were three branches of health care available within Nixon’s plan: Employee Health Insurance, Assisted Health Insurance, and an improved version of Medicare. Employee Health Insurance would cover most Americans and offered at their place of employment. The cost would be shared between the employer and employee to reduce the financial burden on either side. Assisted Health Insurance was designed for low-income persons where the federal and state governments would pay any healthcare costs beyond what the insured individual could pay. An improved Medicare plan would cover Americans who were age 65 and over through a modified system that provided additional benefits. One of these three plans would be available to every American, but participation in the program was voluntary.

The benefits of each plan were identical for all Americans, regardless of age or economic status. These benefits would cover hospital stays, physician care, prescription medications, and medical devices as well as other necessary care. There would be no exclusion of coverage based on the nature of the illness or a preexisting condition. CHIP would also cover treatment for mental illness, alcoholism or addiction regardless of where the treatment is administered.

Nixon also argued that many conditions were preventable from an early age, therefore children should be included in the health care plan. This included preventative care up to age six, eye and hearing examinations, and regular dental care for children age 13 and younger. No family would be asked to pay more than $1,500 per year for out-of-pocket expenses, and low income families would pay even less.

CHIP mandated that Employee Health Insurance would be required to offer all full-time employees health coverage, while additional coverage benefits could be added if mutually agreed upon. Coverage would be jointly financed, where the employer would pay 65% of the premiums for the first three years, then 75% thereafter. Employees would pay the balance of the premiums, and federal subsidies would be provided to ease the cost burden.

Assisted Health Insurance was designed for any American who were unemployed, self-employed, disabled, or were low income. Under this plan, premiums, out-of-pocket expenses and deductibles would be relative to the income of the family enrolled. For example, working families with an income of less than $5,000 would pay no premiums at all. Higher income Americans could also acquire Assisted Health Insurance if other coverage plans offered unreasonable rates.

To improve the Medicare system, Nixon pointed out that Medicare, as it stood, did not cover outpatient drugs or provide any sort of limit for total out-of-pocket costs. CHIP proposed to offer the same benefits provided for others under the Employee Health Insurance and Assisted Health Insurance programs to those covered by Medicare. The limit on out-of-pocket costs would be capped at $750, while public funds would cover the difference for premiums for those with low incomes. In addition, the current Medicare program for the disabled would be replaced by Assisted Health Insurance, which would provide better coverage for those with a low income but high medical costs.

The total cost of CHIP would be just shy of $7 billion, where the federal government would pay $6 billion and state governments would pay $1 billion. Employers would pay $450 for each participating employee, while the average cost for insurance premiums would be $150. Tax rates would not rise, as Nixon was opposed to any comprehensive health plan that required a new federal tax. Overall, his goal was to reduce the burden of cost while simultaneously improving the quality of healthcare for all Americans.