I’ve been through the healthcare reform wars several times. SOMEBODY is always wanting to fix SOMETHING in healthcare. Most of the time, it’s little bits of the system; every 10-15 years, the plans get more grandiose.
Modern day healthcare reform probably began with the Flexner Report, issued in 1910. The AMA sponsored this evaluation of US medical schools. Medicine was just starting to become a science as well as an art, following the explosion of knowledge resulting from Pasteur’s germ theory, Lister’s development of antiseptic technique, the introduction of body imaging (X-Rays), and the arrival of effective means of anesthesia. Suddenly, doctors could actually treat as well as diagnose people’s health problems, and expectations for accuracy and success rose exponentially.
Assuming there was a body of knowledge which the fledgling profession should have at its base, the AMA founded the Council on Medical Education, which undertook a study of how medicine was taught in the new century. The resulting survey led to the death of many proprietary medical schools, leaving only those which adopted a more standardized curriculum and scientific, evidence based approach to the practice of medicine. This change has progressed to the present time, affecting the development of post-graduate training programs (residencies), teaching hospitals, and research institutions.
This change also entrenched the American Medical Association as keepers of physicians’ interests, which often meant limiting the supply of doctors (thru medical school and residency accreditation), and aggrandizing their income (through their roles as experts with esoteric knowledge and skills).
The next big wave of reform fever accompanied FDR into the White House. Avid New Dealers hoped to add healthcare coverage to old age pensions, at least for the elderly, but ran up against the recession of 1937-8, and then into WWII.
The Second World War actually introduced another round of reform, when desperate employers, cramped by laws limiting wage increases, started offering health care coverage to attract workers. Following the war, Truman tried to introduce government sponsored health care financing, but failed to account for the power of the AMA, and the impact of the Korean War on the nation’s checkbook.
1965, of course, saw the passage of Medicare (government financed health insurance for those over 65, and for the disabled), and Medicaid (for the impoverished). This was fought tooth and nail by the AMA. But ironically, it is Medicare which started the grand parade of physicians to the head of the income line among professions, such as teaching, engineering, law, and accounting. By enshrining a fee-based payment system, while eschewing any attempt to set reasonable prices (“allowing the market to set prices”), doctors’ incomes have risen far faster than the average over the past 40 years.
Recognition of this financing flaw came early (and often). In 1973, President Nixon signed into law the Health Maintenance Organization (HMO) act, which attempted to encourage payment to integrated care systems via capitation, or a fixed amount per person. This was based on the Kaiser Permanente model (successfully emulated by my own organization, Group Health Cooperative), which brought all the components of care into one business model, and obliterated fees and services for capitation and physician salaries.
But again, most physicians did not want to be paid that way, and most care providers (doctors and hospitals and others) did not want to limit their business by contracting or integrating with a limited number of either patient-consumers, or other providers. So, 10 years later, the federal government (by now the largest purchaser of health care in the country) moved to alter payment methods to doctors and hospitals. “Diagnostic related groups” (DRGs) and “relative value units” (RVUs) were supposed to stand athwart the relentless increase in medical/health care as a percent of GDP, from 10% in 1978 to over 16% now.
But health care, which in the 80s and 90s grew to employ 15-20% of the working population (often, the hospital is the largest private employer in a community), had developed too many entrenched interests to be amenable to change. Drug and equipment manufacturers, health insurance conglomerates, multi-billion dollar research and training institutions, and entrepreneurial doctors and hospitals did what the market said they would – maximized their income potential by offering more and more services, all paid for by third parties, in such a way that neither the provider (the doctor) nor the consumer (the patient) had any real knowledge of either the billed or the true cost.
So the next round of reform, in 1993, was effective only in stalling the march of medical care towards greater and greater pieces of the national income. My next installment will look more closely at our most recent attempt at reform, examine what it accomplished, and how it ultimately failed and brought into power the grand conservative coalition which almost stalled our economy into oblivion. Finally, in my last essay, I’ll comment on what is “wrong” with our health care system, and what “reform” might actually mean.