Following Carter's election, the new President and the Senator from Massachusetts became embroiled in an argument over what health care reform would look like. In December of 1977, President Carter told Senator Kennedy that his bill had to be changed in order to preserve a large role for private insurance companies, and to minimize federal spending. Carter also told Kenned that healthcare reform had to be phased in so as not to interfere with balancing the federal budget. At first Kennedy compromised and made the requested changes, but Kennedy broke with Carter in July 1978 when Carter would not commit to pursuing a single bill with a fixed schedule for phasing-in comprehensive coverage.
In May 1979, Kennedy proposed a new bipartisan universal national health insurance bill. The bill gave consumers the choice from a number of competing, federally-regulated, private health insurance plans with no cost sharing. The plan was to be financed by premiums, the amount of which depended on the consumer's income. Kennedy proposed an employer mandate and an individual mandate, replacement of Medicaid by government payment of premiums to private insurers, and enhancement of Medicare by adding prescription drug coverage and eliminating premiums and cost sharing. The following month, June of 1979, Carter countered with his own proposal. Carter's program proposed more limited health insurance reform made up of an employer mandate to provide catastrophic private health insurance, and coverage without cost sharing for pregnant women and infants. Carter also proposed federalization of Medicaid with extension to the very poor without dependent minor children, and enhancement of Medicare by adding catastrophic coverage.
In November 1979, Senator Russell Long led a bipartisan conservative majority of his Senate Finance Committee to support an employer mandate to provide catastrophic-only private health insurance and enhancement of Medicare by adding catastrophic coverage. No consensus could be reached, and efforts at coming up with a plan were abandoned in May 1980 due to budget constraints caused by a deteriorating economy.
Many years later, in a 2010 interview, Carter blamed the failure on Ted Kennedy. Kennedy would challenge Carter for the 1980 Democratic Presidential nomination. The challenge was unsuccessful, but it weakened Carter, contributing to Carter's defeat in the 1980 election. In an interview with CBS News senior White House correspondent Bill Plante, the former president said he doesn't have "any doubt" that Kennedy stood in the way of his administration's plans for national health care insurance. Carter told Plante, "I had worked very carefully with the leaders of the five committees, and they were all cooperating with me. We were writing the legislation for pretty much comprehensive health care. We had the full support and intimate involvement of Senator Kennedy and Senator Long, who was also a chairman of a major committee in the Senate and the three chairman of the committees in the House. They were all working with me. At the last minute, the same week we were going to reveal what we have finally come forward to present to the entire Congress and the public, Senator Kennedy decided not to support it."
In his 2010 book "White House Diary," Carter describes Kennedy's withdrawal as "a very great disappointment to me" -- and cites it as the reason his health care bill died. Carter told CBS News "It could have been a major step forward at that time which unfortunately did not happen. He considered himself the inevitable next president and maybe he wanted to have his, I'd say, gold plated comprehensive plan put into effect under his own administration. Or maybe he didn't want me to have a major legislative success."