Birth of The HMO


Ray Koch

Published on Jan 2, 2010

In 1971, Edgar Kaiser, the son of the founder of Kaiser Permanente, one of the first big HMOs, went to see John Ehrlichman, a top aide to President Nixon, to lobby the Nixon White House to pass legislation that would expand the market for health maintenance organizations (HMOs). Ehrlichman reported this conversation to Nixon on February 17, 1971.

The discussion, which was taped, went like this:

Ehrlichman: I had Edgar Kaiser come in…talk to me about this and I went into it in some depth. All the incentives are toward less medical care, because the less care they give them, the more money they make.

President Nixon: Fine. The next day, Nixon publicly announced he would be pushing legislation that would provide Americans “the finest health care in the world.”

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