Disc 2 U.S Healthcare

Chapter 3
.—_._.
The Evolution of Health Services
in the United States
learning Objectives
‘ To discover historical developments that have shaped the US health
care delivery system
‘ To evaluate why the system was resistant to national health insurance reforms during the 19003
‘ To explore developments associated with the corporatization of
health care
‘ To provide a historical perspective on health care reform under the
Affordable Care Act
mm» §§
HEALTH
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Where”: the market?”
Chapter 3
.—_._.
The Evolution of Health Services
in the United States
learning Objectives
‘ To discover historical developments that have shaped the US health
care delivery system
‘ To evaluate why the system was resistant to national health insurance reforms during the 19003
‘ To explore developments associated with the corporatization of
health care
‘ To provide a historical perspective on health care reform under the
Affordable Care Act
mm» §§
HEALTH
essnunmrlw
DDDUDD
QDQDDD
DDQDUD
Where”: the market?”
States United the in afHet1lthSenrites Evolution The – 3 CHAPTER 82
Introduction
States United the in care health of Delivery
systems the from differently quite evolved
has system care health US The Europe. in
(dis- values anthro-cultural by shaped been
politi- social, the and 2) Chapter in cussed
chapter This antecedents. economic and cal,
instru- been have forces these how discusses
of structure current the shaping in mental
evolution. ongoing its and services medical
economic and political, social, Because
u- fl in shifting their static, not are contexts
health the to dynamism certain a lend ences
cultural Conversely, system. delivery care
stable relatively remain values and beliefs
American the in Consequently, time. over
government- a toward initiatives experience,
have program care health national run
Rather, inroads. significant make to failed
mentioned just forces of interaction the
in resulted that compromises certain to led
Incremental time. over changes incremental
1935 since large, and small both changes,
from care health US shifted gradually have
which in one to enterprise private a mainly
sub- a have sectors public and private both
of insurance and nancing fi in role stantial
population different for care health groups
States. United the in
Act Care Affordable the recently, More
most the about bring to promises (ACA)
since care health US in change sweeping
Medicaid and Medicare of creation the
traditional Historically, 1965. in programs
been have values and beliefs American
to attempts any opposing in instrumental
nanc- fi the in changes fundamental initiate
Ironically, care. health of delivery and ing
the to led that maneuvering political the pas13) Chapter (see 2010 in ACA the of sage
consensus represent not did among
Amerthe in ethics and values basic on icans
reform. system health major a of enactment
over divided deeply is nation the Hence,
nancing. fi its and care health of issues
ACA the of effects ultimate the Therefore,
unknown. still are
as emerge not did medicine American
of beginning the until entity professional a
bio- in progress the with century, 20th the
health US the then, Since science. medical
growth a been has system delivery care
science medical of growth The enterprise.
has 5) Chapter in (discussed technology and
US the shaping in role key a played also
Advancement system. delivery care health
factors other influenced has technology of
growth education, medical as such well, as
services health of settings alternative of
in medicine of corporatization and delivery,
of Many contexts. global and national both
developments. recent are these
of evolution the traces chapter This
historical through delivery care health
change major a demarcating each phases,
The system. delivery the of structure the in
preindustrial the is phase evolutionary first
to century 18th the of middle the from era
second The century. 19th the of part latter the
in beginning era postindustrial the is phase
phase— third The century. 19th late the
latter the in era-—began corporate the called
by marked is and century 19th the of part
organizational care, managed of growth the
and revolution, information the integration,
is which phase, fourth The globalization.
what by characterized is infancy, its in still
recently reform, care health as to referred is
ACA. the by about brought
to central is medicine of practice The
por- a therefore, care; health of delivery the
the tracing to devoted is chapter this of tion
a from practice medical in transformations
independent, an to trade insecure and weak
profession. lucrative and respected, highly
States United the in afHet1lthSenrites Evolution The – 3 CHAPTER 82
Introduction
States United the in care health of Delivery
systems the from differently quite evolved
has system care health US The Europe. in
(dis- values anthro-cultural by shaped been
politi- social, the and 2) Chapter in cussed
chapter This antecedents. economic and cal,
instru- been have forces these how discusses
of structure current the shaping in mental
evolution. ongoing its and services medical
economic and political, social, Because
u- fl in shifting their static, not are contexts
health the to dynamism certain a lend ences
cultural Conversely, system. delivery care
stable relatively remain values and beliefs
American the in Consequently, time. over
government- a toward initiatives experience,
have program care health national run
Rather, inroads. significant make to failed
mentioned just forces of interaction the
in resulted that compromises certain to led
Incremental time. over changes incremental
1935 since large, and small both changes,
from care health US shifted gradually have
which in one to enterprise private a mainly
sub- a have sectors public and private both
of insurance and nancing fi in role stantial
population different for care health groups
States. United the in
Act Care Affordable the recently, More
most the about bring to promises (ACA)
since care health US in change sweeping
Medicaid and Medicare of creation the
traditional Historically, 1965. in programs
been have values and beliefs American
to attempts any opposing in instrumental
nanc- fi the in changes fundamental initiate
Ironically, care. health of delivery and ing
the to led that maneuvering political the pas13) Chapter (see 2010 in ACA the of sage
consensus represent not did among
Amerthe in ethics and values basic on icans
reform. system health major a of enactment
over divided deeply is nation the Hence,
nancing. fi its and care health of issues
ACA the of effects ultimate the Therefore,
unknown. still are
as emerge not did medicine American
of beginning the until entity professional a
bio- in progress the with century, 20th the
health US the then, Since science. medical
growth a been has system delivery care
science medical of growth The enterprise.
has 5) Chapter in (discussed technology and
US the shaping in role key a played also
Advancement system. delivery care health
factors other influenced has technology of
growth education, medical as such well, as
services health of settings alternative of
in medicine of corporatization and delivery,
of Many contexts. global and national both
developments. recent are these
of evolution the traces chapter This
historical through delivery care health
change major a demarcating each phases,
The system. delivery the of structure the in
preindustrial the is phase evolutionary first
to century 18th the of middle the from era
second The century. 19th the of part latter the
in beginning era postindustrial the is phase
phase— third The century. 19th late the
latter the in era-—began corporate the called
by marked is and century 19th the of part
organizational care, managed of growth the
and revolution, information the integration,
is which phase, fourth The globalization.
what by characterized is infancy, its in still
recently reform, care health as to referred is
ACA. the by about brought
to central is medicine of practice The
por- a therefore, care; health of delivery the
the tracing to devoted is chapter this of tion
a from practice medical in transformations
independent, an to trade insecure and weak
profession. lucrative and respected, highly
Developments since the corporatization
stage, however, have made a significant
impact on practice styles and have compromised the autonomy that physicians had
historically enjoyed. Heightened government regulations and oversight under the
ACA are likely to put further operational
and financial constraints on medical organizations and physicians. Figure 3-1 provides
a snapshot ofthe historical developments in
US health care delivery.
Medical Services in the Preindustrial Era
From colonial times to the beginning ofthe
20th century, American medicine lagged
behind the advances in medical science,
Figure 3-1 Evolution of the US Health Care Delivery System.
Medical Services in the Prs-industrial Era 83
experimental research, and medical education that were taking place in Britain,
France, and Germany. While London,
Paris, and Berlin were flourishing as major
research centers, Americans had a tendency
to neglect research in basic sciences and to
place more emphasis on applied science
(Shryock 1966). In addition, American
attitudes about medical treatment placed
strong emphasis on natural history and conservative common sense (Stevens 1971).
Consequently, the practice of medicine in
the United States had a strong domestic,
rather than professional, character. Medical services, when deemed appropriate
by the consumer, were purchased our of
one‘s private funds, because there was no
health insurance. The health care market
Development of science and technology
Mid-l 3th to late l9th century
I Open entry into medical practice
I Intense competition
I Weak and unorganized prolession
Apprenticeship training
Undeveloped hospitals
Almshouses and pesthouses
Dispensaries
Licensing
Private payment for services
low demand lar services
Private medical schools providing
only general education
Consumer sovereignty
late l9th to late 20th century
Scientilic basis of medicine
Urbanization
Emergence of the modern hospital
Emergence of organized medicine
Reform ol medical training
I
I
I
I
I
I
I Specialization in medicine
Mental asylams I Development of public health
I Community mental health
I Birth ol workers‘ compensation
I Emergence of private insurance
I Failure oi national health insurance
I Medicaid and Medicare
I Prototypes of managed care
Prolessional dominance
late 20th to 21st century
I Corporatization
Managed care
Organizational integration
Diluted physician autonomy
I Information revolution
Telemedicine
E-health
Patient empowerment
I Globalization
Global telemedicine
Medical tourism
Foreign investment in health care
Migration ol professionals
Spread of infectious diseases
I Corporate dominance
Era of health care relorm
G|’.’l‘v’EI’lll’l’|l-‘:lll (lDlT|l|’lE||’l[E
Beliefs and values/Social, economic, and political constraints
Developments since the corporatization
stage, however, have made a significant
impact on practice styles and have compromised the autonomy that physicians had
historically enjoyed. Heightened government regulations and oversight under the
ACA are likely to put further operational
and financial constraints on medical organizations and physicians. Figure 3-1 provides
a snapshot ofthe historical developments in
US health care delivery.
Medical Services in the Preindustrial Era
From colonial times to the beginning ofthe
20th century, American medicine lagged
behind the advances in medical science,
Figure 3-1 Evolution of the US Health Care Delivery System.
Medical Services in the Prs-industrial Era 83
experimental research, and medical education that were taking place in Britain,
France, and Germany. While London,
Paris, and Berlin were flourishing as major
research centers, Americans had a tendency
to neglect research in basic sciences and to
place more emphasis on applied science
(Shryock 1966). In addition, American
attitudes about medical treatment placed
strong emphasis on natural history and conservative common sense (Stevens 1971).
Consequently, the practice of medicine in
the United States had a strong domestic,
rather than professional, character. Medical services, when deemed appropriate
by the consumer, were purchased our of
one‘s private funds, because there was no
health insurance. The health care market
Development of science and technology
Mid-l 3th to late l9th century
I Open entry into medical practice
I Intense competition
I Weak and unorganized prolession
Apprenticeship training
Undeveloped hospitals
Almshouses and pesthouses
Dispensaries
Licensing
Private payment for services
low demand lar services
Private medical schools providing
only general education
Consumer sovereignty
late l9th to late 20th century
Scientilic basis of medicine
Urbanization
Emergence of the modern hospital
Emergence of organized medicine
Reform ol medical training
I
I
I
I
I
I
I Specialization in medicine
Mental asylams I Development of public health
I Community mental health
I Birth ol workers‘ compensation
I Emergence of private insurance
I Failure oi national health insurance
I Medicaid and Medicare
I Prototypes of managed care
Prolessional dominance
late 20th to 21st century
I Corporatization
Managed care
Organizational integration
Diluted physician autonomy
I Information revolution
Telemedicine
E-health
Patient empowerment
I Globalization
Global telemedicine
Medical tourism
Foreign investment in health care
Migration ol professionals
Spread of infectious diseases
I Corporate dominance
Era of health care relorm
G|’.’l‘v’EI’lll’l’|l-‘:lll (lDlT|l|’lE||’l[E
Beliefs and values/Social, economic, and political constraints
States United the in Services Health of Evolution The I 3 CHAPTER 84
among competition by characterized was
who decided consumer the and providers,
consumer the Thus, be. would provider the
and market care health the in sovereign was
free-market under delivered was care health
conditions.
med- the why explain factors main Five
insig- an largely remained profession ical
America: preindustrial in trade nificant
disarray. in was practice Medical
primitive. were procedures Medical
missing. was core institutional An
unstable. was Demand
substandard. was education Medical S-“:‘==-S~‘t*~’.—
Disarray in Practice Medical
be could medicine of practice early The
profession. a than trade a as more regarded
of course rigorous the require not did it
training, residency practice, clinical study,
it which without licensing or exams, board
close the At today. practice to impossible is
who “anyone 865), l —l 86 l ( War Civil ofthe
a as up himself set to inclination the had
the of exigencies the so, do could physician
would who determining alone market prove
not” would who and field the in successful
example, for clergy, The 1979). (Hamowy
reli- and services medical combined often
educated well generally The duties. gious
more was cial fi of government or clergyman
at were physicians than medicine in learned
such Tradesmen, 1966). (Shryock time the
merchants, commodity barbers, tailors, as
trades, other numerous in engaged those and
selling by arts healing the practiced also
and elixirs, nostrums, prescriptions, herbal
nat- and homeopaths, Midwives, cathartics.
with- medicine practice also could uralists
striped red—and-white The restriction. out
bandages) and blood (symbolizing poles
that reminders are barbershops outside seen
one at surgeons as functioned also barbers
shave hair, cut to blade same the using time,
sick. the bleed and beards,
been has pluralism medical of era This
and Kaptchuk by zone” “war a as to referred
by marked was it because (2001) Eisenberg
prac- various the among antagonism bitter
American the 1847, in Later, sects. ticing
founded was (AMA) Association Medical
bar- a erecting of purpose main the with
the and practitioners orthodox between rier
1972). (Rothstein “irregulars”
stan- minimum of absence the In
pri- into entry training, medical of dards
both for easy relatively was practice vate
cre- practitioners, untrained and trained
as Medicine competition. intense ating
unorganized. and weak was profession a
pres- the enjoy not did physicians Hence,
they that incomes and influence, tige,
it found physicians Many earned. later
occupa- second a in engage to necessary
prac- medical from income because tion
a support to inadequate was alonc tice
physi- most that estimated is It family.
century mid—l9th the in incomes cians’
mid- the of end lower the at them placed
that estimated is It 1982). (Starr class dle
serv- physicians 6,800 were there l830 in
al. et (Gabe classes upper the primarily ing
medical that 1870 until not was It 1994).
licensing and reformed was education
States. United the in passed were laws
Procedures Medical Primitive
was care medical mid-1800s, the until Up
traditions medical primitive on more based
diagnos- of absence the In science. than
outgo” and “intake of theory a tools, tic
diseases all for explanation an as served
States United the in Services Health of Evolution The I 3 CHAPTER 84
among competition by characterized was
who decided consumer the and providers,
consumer the Thus, be. would provider the
and market care health the in sovereign was
free-market under delivered was care health
conditions.
med- the why explain factors main Five
insig- an largely remained profession ical
America: preindustrial in trade nificant
disarray. in was practice Medical
primitive. were procedures Medical
missing. was core institutional An
unstable. was Demand
substandard. was education Medical S-“:‘==-S~‘t*~’.—
Disarray in Practice Medical
be could medicine of practice early The
profession. a than trade a as more regarded
of course rigorous the require not did it
training, residency practice, clinical study,
it which without licensing or exams, board
close the At today. practice to impossible is
who “anyone 865), l —l 86 l ( War Civil ofthe
a as up himself set to inclination the had
the of exigencies the so, do could physician
would who determining alone market prove
not” would who and field the in successful
example, for clergy, The 1979). (Hamowy
reli- and services medical combined often
educated well generally The duties. gious
more was cial fi of government or clergyman
at were physicians than medicine in learned
such Tradesmen, 1966). (Shryock time the
merchants, commodity barbers, tailors, as
trades, other numerous in engaged those and
selling by arts healing the practiced also
and elixirs, nostrums, prescriptions, herbal
nat- and homeopaths, Midwives, cathartics.
with- medicine practice also could uralists
striped red—and-white The restriction. out
bandages) and blood (symbolizing poles
that reminders are barbershops outside seen
one at surgeons as functioned also barbers
shave hair, cut to blade same the using time,
sick. the bleed and beards,
been has pluralism medical of era This
and Kaptchuk by zone” “war a as to referred
by marked was it because (2001) Eisenberg
prac- various the among antagonism bitter
American the 1847, in Later, sects. ticing
founded was (AMA) Association Medical
bar- a erecting of purpose main the with
the and practitioners orthodox between rier
1972). (Rothstein “irregulars”
stan- minimum of absence the In
pri- into entry training, medical of dards
both for easy relatively was practice vate
cre- practitioners, untrained and trained
as Medicine competition. intense ating
unorganized. and weak was profession a
pres- the enjoy not did physicians Hence,
they that incomes and influence, tige,
it found physicians Many earned. later
occupa- second a in engage to necessary
prac- medical from income because tion
a support to inadequate was alonc tice
physi- most that estimated is It family.
century mid—l9th the in incomes cians’
mid- the of end lower the at them placed
that estimated is It 1982). (Starr class dle
serv- physicians 6,800 were there l830 in
al. et (Gabe classes upper the primarily ing
medical that 1870 until not was It 1994).
licensing and reformed was education
States. United the in passed were laws
Procedures Medical Primitive
was care medical mid-1800s, the until Up
traditions medical primitive on more based
diagnos- of absence the In science. than
outgo” and “intake of theory a tools, tic
diseases all for explanation an as served
(Rosenberg 1979). It was believed that diseases needed to be expelled from the body.
Hence, bleeding, use of emetics (to induce
vomiting) and diuretics (to increase urination), and purging with enemas and purgatives (to clean the bowels) were popular
forms of clinical therapy.
When George Washington became ill
with an inflamed throat in 1799, he too was
bled by physicians. One of the attending
physicians argued, unsuccessfully, in favor
of making an incision to open the trachea,
which today would be considered a more
enlightened procedure. The bleeding most
likely weakened Washington’s resistance,
and historians have debated whether it
played a role in his death (Clark 1998).
Surgeries were limited because anesthesia had not yet been developed and
antiseptic techniques were not known.
Stethoscopes and X-rays had not been discovered, clinical thermometers were not in
use, and microscopes were not available for
a better understanding of pathology. Physicians relied mainly on their five senses and
experience to diagnose and treat medical
problems. Hence, in most cases, physicians
did not possess any technical expertise
greater than that ofthe mothers and grandparents at home or experienced neighbors in
the community.
Missing Institutional Care
In the United States, no widespread development of hospitals occurred before the
1880s. A few isolated hospitals were either
built or developed in rented private houses
in large cities, such as Philadelphia, New
York, Boston, Cincinnati, New Orleans,
and St. Louis. By contrast, general hospital expansion began much before the 1800s
in France and Britain (Stevens 1971).
Medical Services in the Preindostrial Era 85
In Europe, medical professionals were
closely associated with hospitals. New
advances in medical science were being pioneered, which European hospitals readily
adopted. The medical profession came to be
supremely regarded because ofits close association with an establishment that was scientifically advanced. In contrast, American
hospitals played only a small part in medical practice because most hospitals served a
social welfare fi.lI’lCll0l”I by taking care ofthe
poor, those without families, or those who
were away from home on travel.
The Almshouse and the Pesthouse
In the United States, the czlnzrdrrzrzse, also
called a poorhouse, was the common ancestor of both hospitals and nursing homes.
The poorhouse program was adopted from
the Elizabethan system of public charity based on English Poor Laws. The first
poorhouse in the United States is recorded
to have opened in 1660 in Boston (Wagner
2005). Almshouses served, primarily, general welfare functions by providing food
and shelter to the destitute of society. Therefore, the main function of the almshouse
was custodial. Caring for the sick was incidental because some ofthe residents would
inevitably become ill and would be cared
for in an adjoining infirmary. Almshouses
were unspecialized institutions that admitted poor and needy persons of all kinds: the
elderly, the orphaned, the insane, the ill, and
the disabled. Hence, the early hospital-type
institutions emerged mainly to take care of
indigent people whose families could not
care for them.
Another type of institution, the [vesthorr.s‘e, was operated by local governments
to quarantine people who had contracted a
contagious disease, such as cholera, smallpox,
(Rosenberg 1979). It was believed that diseases needed to be expelled from the body.
Hence, bleeding, use of emetics (to induce
vomiting) and diuretics (to increase urination), and purging with enemas and purgatives (to clean the bowels) were popular
forms of clinical therapy.
When George Washington became ill
with an inflamed throat in 1799, he too was
bled by physicians. One of the attending
physicians argued, unsuccessfully, in favor
of making an incision to open the trachea,
which today would be considered a more
enlightened procedure. The bleeding most
likely weakened Washington’s resistance,
and historians have debated whether it
played a role in his death (Clark 1998).
Surgeries were limited because anesthesia had not yet been developed and
antiseptic techniques were not known.
Stethoscopes and X-rays had not been discovered, clinical thermometers were not in
use, and microscopes were not available for
a better understanding of pathology. Physicians relied mainly on their five senses and
experience to diagnose and treat medical
problems. Hence, in most cases, physicians
did not possess any technical expertise
greater than that ofthe mothers and grandparents at home or experienced neighbors in
the community.
Missing Institutional Care
In the United States, no widespread development of hospitals occurred before the
1880s. A few isolated hospitals were either
built or developed in rented private houses
in large cities, such as Philadelphia, New
York, Boston, Cincinnati, New Orleans,
and St. Louis. By contrast, general hospital expansion began much before the 1800s
in France and Britain (Stevens 1971).
Medical Services in the Preindostrial Era 85
In Europe, medical professionals were
closely associated with hospitals. New
advances in medical science were being pioneered, which European hospitals readily
adopted. The medical profession came to be
supremely regarded because ofits close association with an establishment that was scientifically advanced. In contrast, American
hospitals played only a small part in medical practice because most hospitals served a
social welfare fi.lI’lCll0l”I by taking care ofthe
poor, those without families, or those who
were away from home on travel.
The Almshouse and the Pesthouse
In the United States, the czlnzrdrrzrzse, also
called a poorhouse, was the common ancestor of both hospitals and nursing homes.
The poorhouse program was adopted from
the Elizabethan system of public charity based on English Poor Laws. The first
poorhouse in the United States is recorded
to have opened in 1660 in Boston (Wagner
2005). Almshouses served, primarily, general welfare functions by providing food
and shelter to the destitute of society. Therefore, the main function of the almshouse
was custodial. Caring for the sick was incidental because some ofthe residents would
inevitably become ill and would be cared
for in an adjoining infirmary. Almshouses
were unspecialized institutions that admitted poor and needy persons of all kinds: the
elderly, the orphaned, the insane, the ill, and
the disabled. Hence, the early hospital-type
institutions emerged mainly to take care of
indigent people whose families could not
care for them.
Another type of institution, the [vesthorr.s‘e, was operated by local governments
to quarantine people who had contracted a
contagious disease, such as cholera, smallpox,
States United the in Services Health of Evolution The I 3 CHAPTER 86
primarily Located fever. yellow or typhoid,
pest- a of function primary the seaports, in
contagious with people isolate to was house
spread not would disease so diseases among
institutions These city. a of inhabitants the
contagious-disease of predecessors the were
hospitals. tuberculosis and
Dispensary The
outpatient as established were Dispensaries
provide to hospitals, of independent clinics,
to afford not could who those to care free
often families their and workers Urban pay.
1983). (Rosen charity such on depended
dis- 1786, in Philadelphia with Starting
cities. other to spread gradually pensaries
by nanced fi institutions, private were They
Their subscriptions. voluntary and bequests
medi- basic provide to was function main
ambulatory to drugs dispense to and care cal
Generally, 1980). (Raffel patients young
phyclinical desiring students medical and sicians
well as dispensaries, these staffed experience
for basis part-time a on wards, hospital as
which 1996), (Martensen income no or little
needed provided It purpose. dual a served
physi- both enabled and poor the to services
experience gain to students medical and cians
cases. of variety a treating and diagnosing
medi- specialized of practice the as Later,
was research, and teaching as well as cine,
dispen- many
settings, hospital to transferred
hospitals into absorbed gradually were saries
outpatient Indeed, departments. outpatient as
an became departments care ambulatory or
consultation specialty for locale important
I980). (Raffel hospitals large within services
Asylum Mental The
primar- seen, was care health Mental
local and state of responsibility the as ily,
known was little time, this At governments.
how or illness mental caused what about
health mental some Although it. treat to
asy- almshouses, to ned fi con were patients
with patients for states by built were lums
first The illness. mental chronic untreatable,
Wil- in 1770 around built was asylum such
Pennsylva- the When Virginia. liamsburg,
1752, in Philadelphia in opened Hospital nia
asylum. mental a as used was basement its
employed asylums these in Attendants
in techniques psychological and physical
level some to patients return to effort an
as such Techniques thinking. rational of
ice- and hot and vomiting, forced bleeding,
1894 Between used. also were baths cold
were Acts Care State the 1, War World and
responsibility nancial fi centralizing passed,
gov- state every in patients ill mentally for
advan- took governments Local ernment.
those all send to opportunity this of tage
depen- including illness, mental a with
asylums. state the to citizens, older dent,
asylums public in care of quality The
and overcrowding as rapidly, deteriorated
Surgeon (US rampant ran underfunding
1999). General
Hospital Dreaded The
similar hospitals were l850s the until Not
United the in developed Europe in those to
deplor- had hospitals early These States.
resources. of lack a to due conditions able
ventilation inadequate and sanitation Poor
Unhy- hospitals. these of hallmarks were
nurses because prevailed practices gienic
early These untrained. and unskilled were
being of image undesirable an had hospitals
among rate mortality The death. of houses
and Europe in both patients, hospital
1870s the in 74% around stood America,
hospitals into went People 1999). (Falk
States United the in Services Health of Evolution The I 3 CHAPTER 86
primarily Located fever. yellow or typhoid,
pest- a of function primary the seaports, in
contagious with people isolate to was house
spread not would disease so diseases among
institutions These city. a of inhabitants the
contagious-disease of predecessors the were
hospitals. tuberculosis and
Dispensary The
outpatient as established were Dispensaries
provide to hospitals, of independent clinics,
to afford not could who those to care free
often families their and workers Urban pay.
1983). (Rosen charity such on depended
dis- 1786, in Philadelphia with Starting
cities. other to spread gradually pensaries
by nanced fi institutions, private were They
Their subscriptions. voluntary and bequests
medi- basic provide to was function main
ambulatory to drugs dispense to and care cal
Generally, 1980). (Raffel patients young
phyclinical desiring students medical and sicians
well as dispensaries, these staffed experience
for basis part-time a on wards, hospital as
which 1996), (Martensen income no or little
needed provided It purpose. dual a served
physi- both enabled and poor the to services
experience gain to students medical and cians
cases. of variety a treating and diagnosing
medi- specialized of practice the as Later,
was research, and teaching as well as cine,
dispen- many
settings, hospital to transferred
hospitals into absorbed gradually were saries
outpatient Indeed, departments. outpatient as
an became departments care ambulatory or
consultation specialty for locale important
I980). (Raffel hospitals large within services
Asylum Mental The
primar- seen, was care health Mental
local and state of responsibility the as ily,
known was little time, this At governments.
how or illness mental caused what about
health mental some Although it. treat to
asy- almshouses, to ned fi con were patients
with patients for states by built were lums
first The illness. mental chronic untreatable,
Wil- in 1770 around built was asylum such
Pennsylva- the When Virginia. liamsburg,
1752, in Philadelphia in opened Hospital nia
asylum. mental a as used was basement its
employed asylums these in Attendants
in techniques psychological and physical
level some to patients return to effort an
as such Techniques thinking. rational of
ice- and hot and vomiting, forced bleeding,
1894 Between used. also were baths cold
were Acts Care State the 1, War World and
responsibility nancial fi centralizing passed,
gov- state every in patients ill mentally for
advan- took governments Local ernment.
those all send to opportunity this of tage
depen- including illness, mental a with
asylums. state the to citizens, older dent,
asylums public in care of quality The
and overcrowding as rapidly, deteriorated
Surgeon (US rampant ran underfunding
1999). General
Hospital Dreaded The
similar hospitals were l850s the until Not
United the in developed Europe in those to
deplor- had hospitals early These States.
resources. of lack a to due conditions able
ventilation inadequate and sanitation Poor
Unhy- hospitals. these of hallmarks were
nurses because prevailed practices gienic
early These untrained. and unskilled were
being of image undesirable an had hospitals
among rate mortality The death. of houses
and Europe in both patients, hospital
1870s the in 74% around stood America,
hospitals into went People 1999). (Falk
because of dire consequences, not by
personal choice. It is not hard to imagine why members of the middle and
upper classes, in particular, shunned such
establishments.
Unstable Demand
Professional services suffered from low
demand in the mainly rural, preindustrial
society, and much of the medical care was
provided by people who were not physicians.
The most competent physicians were located
in more populated communities (Bordley and
Harvey 1976). In the small communities of
rural America, a spirit of strong self-reliance
prevailed. Families and communities were
accustomed to treating the sick, often using
folk remedies passed from one generation to
the next. It was also common to consult published books and pamphlets that gave advice
on home remedies (Rosen 1983).
The market for physicians’ services was
also limited by economic conditions. Many
families could not afford to pay for medical services. Two factors contributed to the
high cost associated with obtaining professional medical care: (1) The indirect costs
oftransportation and the “opportunity cost”
of travel (i.e., forgone value of time that
could have been used for something more
productive) could easily outweigh the direct
costs of physicians’ fees. (2) The costs of
travel often doubled because two people,
the physician and an emissary, had to make
the trip back and forth. For a farmer, a trip of
10 miles into town could mean an entire
day’s work lost. Farmers had to cover travel
costs and the opportunity cost oftime spent
traveling. Mileage charges amounted to
four or five times the basic fee for a visit if a
physician had to travel 5 to 10 miles. Hence,
most families obtained only occasional
Medical Services in the Prevndastrial Era 87
intervention from physicians, generally
for nonroutine and severe conditions (Starr
1982).
Personal health services had to be purchased without the help of government or
private insurance. Private practice and_f’ec’_fi;r
.servic’e—the practice ofbilling separately for
each individual type of service performed-—
was firmly embedded in American medical
care. Similar to physicians, dentists were
private entrepreneurs who made their living
by private fee—for-service dental practice,
but their services were not in great demand
because there was little public concern about
dental health (Anderson 1990).
Substandard Medical Education
From about 1800 to 1850, medical training was largely received through individual
apprenticeship with a practicing physician,
referred to as a preceptor, rather than through
university education. Many ofthe preceptors
were themselves poorly trained, especially
in basic medical sciences (Rothstein 1972).
By 1800, only four small medical schools
were operating in the United States: College
of Philadelphia (whose medical school was
established in 1756, and which later became
the University of Pennsylvania), l(ing’s College (whose medical school was established
in 1768, and which later became Columbia
University), Harvard Medical School (opened
in 1782), and the Geisel School of Medicine
at Dartmouth College (started in 1797).
American physicians later initiated the
establishment of medical schools in large
numbers. This was partly to enhance professional status and prestige and partly to
enhance income. Medical schools were
inexpensive to operate and often quite profitable. All that was required was a faculty
of four or more physicians, a classroom,
because of dire consequences, not by
personal choice. It is not hard to imagine why members of the middle and
upper classes, in particular, shunned such
establishments.
Unstable Demand
Professional services suffered from low
demand in the mainly rural, preindustrial
society, and much of the medical care was
provided by people who were not physicians.
The most competent physicians were located
in more populated communities (Bordley and
Harvey 1976). In the small communities of
rural America, a spirit of strong self-reliance
prevailed. Families and communities were
accustomed to treating the sick, often using
folk remedies passed from one generation to
the next. It was also common to consult published books and pamphlets that gave advice
on home remedies (Rosen 1983).
The market for physicians’ services was
also limited by economic conditions. Many
families could not afford to pay for medical services. Two factors contributed to the
high cost associated with obtaining professional medical care: (1) The indirect costs
oftransportation and the “opportunity cost”
of travel (i.e., forgone value of time that
could have been used for something more
productive) could easily outweigh the direct
costs of physicians’ fees. (2) The costs of
travel often doubled because two people,
the physician and an emissary, had to make
the trip back and forth. For a farmer, a trip of
10 miles into town could mean an entire
day’s work lost. Farmers had to cover travel
costs and the opportunity cost oftime spent
traveling. Mileage charges amounted to
four or five times the basic fee for a visit if a
physician had to travel 5 to 10 miles. Hence,
most families obtained only occasional
Medical Services in the Prevndastrial Era 87
intervention from physicians, generally
for nonroutine and severe conditions (Starr
1982).
Personal health services had to be purchased without the help of government or
private insurance. Private practice and_f’ec’_fi;r
.servic’e—the practice ofbilling separately for
each individual type of service performed-—
was firmly embedded in American medical
care. Similar to physicians, dentists were
private entrepreneurs who made their living
by private fee—for-service dental practice,
but their services were not in great demand
because there was little public concern about
dental health (Anderson 1990).
Substandard Medical Education
From about 1800 to 1850, medical training was largely received through individual
apprenticeship with a practicing physician,
referred to as a preceptor, rather than through
university education. Many ofthe preceptors
were themselves poorly trained, especially
in basic medical sciences (Rothstein 1972).
By 1800, only four small medical schools
were operating in the United States: College
of Philadelphia (whose medical school was
established in 1756, and which later became
the University of Pennsylvania), l(ing’s College (whose medical school was established
in 1768, and which later became Columbia
University), Harvard Medical School (opened
in 1782), and the Geisel School of Medicine
at Dartmouth College (started in 1797).
American physicians later initiated the
establishment of medical schools in large
numbers. This was partly to enhance professional status and prestige and partly to
enhance income. Medical schools were
inexpensive to operate and often quite profitable. All that was required was a faculty
of four or more physicians, a classroom,
States United the in Services Health of Evolution The I 3 CHAPTER 88
and dissections, conduct to room back a
Operat- degrees. confer to authority legal
student of out totally met were expenses ing
physi- the to directly paid were that fees
would Physicians 1972). (Rothstein cians
confer- the for college local a with affiliate
facilities. classroom of use and degrees of ral
medical entered men of numbers Large
became medicine in education as practice
into entry unrestricted and available readily
(Hamowy possible still was profession the
medi- from physicians as Gradually, 1979).
from those outnumber to began schools cal
of Doctor the system, apprenticeship the
stan- the became degree (MD) Medicine
medi- of number The competence. of dard
1820 and 1800 between tripled schools cal
1850, and 1820 between again tripled and
1972). (Rothstein I850 in 42 numbering
replaced gradually preparation Academic
training. apprenticeship
the in education medical point, this At
in cient fi de seriously was States United
European unlike training, science-based
the in schools Medical schools. medical
and laboratories, have not did States United
not were practice and observation clinical
European contrast, In curriculum. the of part
Ger- in those particularly schools, medical
laboratory-based emphasizing were many,
Ber- of University the At research. medical
expected were professors example, for lin,
and teach, as well as research, conduct to
medical American In state. the by paid were
practi- local by taught were students schools,
education in ill-equipped were who tioners,
medical where Europe, Unlike training. and
the by regulated and financed was education
in schools medical proprietary government,
standards own their set States United the
A 1985). Warner and (Numbers year
of
States United the in school medical generonly required and months 4 only lasted ally
Ameri- addition, In graduation. for years 2
repeated customarily students medical can
their during taken had they courses same the
year second their during again year first
2001). Rosner 1985; Warner and (Numbers
schools their keep to desire physicians’ The
standards low to contributed also profitable
higher that feared was It rigor. of lack a and
drive would education medical in standards
the force could which down, enrollments
1982). (Starr bankruptcy into schools
Era Postindustrial the in Services Medical
physi- American period, postindustrial the In
world, the in physicians other unlike cians,
private retaining in successful highly were
national resisting and medicine of practice
scientifi- delivered Physicians care. health
to services advanced technically and cally
medi- organized an became patients; insured
prestige, power, gained and profession; cal
this of much Notably, success. nancial fi and
of aftermath the in occurred transformation
in changes cfi scienti and Social War. Civil the
accompa- were war the following period the
agricultural rural, a from transition a by nied
capitalism. industrial of system a to economy
war the in used techniques production Mass
Rail- industries. peacetime to applied were
and coasts, west and east the linked roads
1971). (Stevens cities became towns small
delivering for system American The
this during shape current its took care health
employers of role ned fi de well The period.
for compensation workers’ providing in
together illnesses, and injuries work-related
was considerations, economic other with
health private of growth the in instrumental
pass to attempts though Even insurance.
rising failed, legislation care health national
to Congress prompted care health of costs
States United the in Services Health of Evolution The I 3 CHAPTER 88
and dissections, conduct to room back a
Operat- degrees. confer to authority legal
student of out totally met were expenses ing
physi- the to directly paid were that fees
would Physicians 1972). (Rothstein cians
confer- the for college local a with affiliate
facilities. classroom of use and degrees of ral
medical entered men of numbers Large
became medicine in education as practice
into entry unrestricted and available readily
(Hamowy possible still was profession the
medi- from physicians as Gradually, 1979).
from those outnumber to began schools cal
of Doctor the system, apprenticeship the
stan- the became degree (MD) Medicine
medi- of number The competence. of dard
1820 and 1800 between tripled schools cal
1850, and 1820 between again tripled and
1972). (Rothstein I850 in 42 numbering
replaced gradually preparation Academic
training. apprenticeship
the in education medical point, this At
in cient fi de seriously was States United
European unlike training, science-based
the in schools Medical schools. medical
and laboratories, have not did States United
not were practice and observation clinical
European contrast, In curriculum. the of part
Ger- in those particularly schools, medical
laboratory-based emphasizing were many,
Ber- of University the At research. medical
expected were professors example, for lin,
and teach, as well as research, conduct to
medical American In state. the by paid were
practi- local by taught were students schools,
education in ill-equipped were who tioners,
medical where Europe, Unlike training. and
the by regulated and financed was education
in schools medical proprietary government,
standards own their set States United the
A 1985). Warner and (Numbers year
of
States United the in school medical generonly required and months 4 only lasted ally
Ameri- addition, In graduation. for years 2
repeated customarily students medical can
their during taken had they courses same the
year second their during again year first
2001). Rosner 1985; Warner and (Numbers
schools their keep to desire physicians’ The
standards low to contributed also profitable
higher that feared was It rigor. of lack a and
drive would education medical in standards
the force could which down, enrollments
1982). (Starr bankruptcy into schools
Era Postindustrial the in Services Medical
physi- American period, postindustrial the In
world, the in physicians other unlike cians,
private retaining in successful highly were
national resisting and medicine of practice
scientifi- delivered Physicians care. health
to services advanced technically and cally
medi- organized an became patients; insured
prestige, power, gained and profession; cal
this of much Notably, success. nancial fi and
of aftermath the in occurred transformation
in changes cfi scienti and Social War. Civil the
accompa- were war the following period the
agricultural rural, a from transition a by nied
capitalism. industrial of system a to economy
war the in used techniques production Mass
Rail- industries. peacetime to applied were
and coasts, west and east the linked roads
1971). (Stevens cities became towns small
delivering for system American The
this during shape current its took care health
employers of role ned fi de well The period.
for compensation workers’ providing in
together illnesses, and injuries work-related
was considerations, economic other with
health private of growth the in instrumental
pass to attempts though Even insurance.
rising failed, legislation care health national
to Congress prompted care health of costs
create the publicly financed programs, such
as Medicare and Medicaid, for the most
vulnerable members of society. Cost considerations also motivated the formation of
prototypes for modern managed care organizations (MCOs).
Growth of Professional Sovereignty
The 1920s may well mark the consolidation
of physicians’ professional power. During
and after World War I, physicians’ incomes
grew sharply, and their prominence as a
profession finally emerged. This prestige
and power, however, did not materialize
overnight. Through the years, several factors interacted in the gradual transformation
of medicine from a weak, insecure, and isolated trade into a profession of power and
authority. Seven key factors contributed to
this transformation:
Urbanization
Science and technology
institutionalization
Dependency
Autonomy and organization
Licensing
:‘*-“F””E~”:l“*E~*”!‘*-“1‘ Educational reform
Urbanization
Urbanization created increased reliance on
the specialized skills of paid professionals.
First, it distanced people from their families
and neighborhoods where family-based care
was traditionally given. Women began working outside the home and could no longer
care for sick members ofthe family. Second,
physicians became less expensive to consult as telephones, automobiles, and paved
roads reduced the opportunity cost of time
Medicol Services in the Pastindustrial Era 89
and travel and medical care became more
affordable. Urban development attracted
more and more Americans to the growing
towns and cities. In 1840, only 11% of the
US population lived in urban areas; by 1900,
the proportion of the US population living
in urban areas grew to 40% (Stevens 1971).
The trend away from home visits to office
practice also began to develop around this
time (Rosen 1983). Physicians moved to cities and towns in large numbers to be closer
to their growing markets. Better geographic
proximity of patients enabled physicians to
see more patients in a given amount oftime.
Whereas physicians in 1850 only saw an
average of 5 to 7 patients a day, by the early
1940s, the average patient load of general
practitioners had risen to 18 to 22 patients a
day (Starr 1982).
Science and Technology
Exhibit 3-] summarizes some ofthe groundbreaking scientific discoveries in medicine.
Advances in bacteriology, antiseptic surgery, anesthesia, immunology, and diagnostic techniques, along with an expanding
repertoire of new drugs, gave medicine an
aura of legitimacy and complexity, and the
therapeutic effectiveness of scientific medicine became widely recognized.
When advanced technical knowledge
becomes essential to practice a profession
and the benefits of professional services
are widely recognized, a greater acceptance
and a legitimate need for the services ofthat
profession are simultaneously created. Cultural nrzrhvzriry refers to the general acceptance of and reliance on the judgment of
the members of a profession (Starr 1982)
because of their superior knowledge and
expertise. Cultural authority legitimizes a
profession in the eyes of common people.
create the publicly financed programs, such
as Medicare and Medicaid, for the most
vulnerable members of society. Cost considerations also motivated the formation of
prototypes for modern managed care organizations (MCOs).
Growth of Professional Sovereignty
The 1920s may well mark the consolidation
of physicians’ professional power. During
and after World War I, physicians’ incomes
grew sharply, and their prominence as a
profession finally emerged. This prestige
and power, however, did not materialize
overnight. Through the years, several factors interacted in the gradual transformation
of medicine from a weak, insecure, and isolated trade into a profession of power and
authority. Seven key factors contributed to
this transformation:
Urbanization
Science and technology
institutionalization
Dependency
Autonomy and organization
Licensing
:‘*-“F””E~”:l“*E~*”!‘*-“1‘ Educational reform
Urbanization
Urbanization created increased reliance on
the specialized skills of paid professionals.
First, it distanced people from their families
and neighborhoods where family-based care
was traditionally given. Women began working outside the home and could no longer
care for sick members ofthe family. Second,
physicians became less expensive to consult as telephones, automobiles, and paved
roads reduced the opportunity cost of time
Medicol Services in the Pastindustrial Era 89
and travel and medical care became more
affordable. Urban development attracted
more and more Americans to the growing
towns and cities. In 1840, only 11% of the
US population lived in urban areas; by 1900,
the proportion of the US population living
in urban areas grew to 40% (Stevens 1971).
The trend away from home visits to office
practice also began to develop around this
time (Rosen 1983). Physicians moved to cities and towns in large numbers to be closer
to their growing markets. Better geographic
proximity of patients enabled physicians to
see more patients in a given amount oftime.
Whereas physicians in 1850 only saw an
average of 5 to 7 patients a day, by the early
1940s, the average patient load of general
practitioners had risen to 18 to 22 patients a
day (Starr 1982).
Science and Technology
Exhibit 3-] summarizes some ofthe groundbreaking scientific discoveries in medicine.
Advances in bacteriology, antiseptic surgery, anesthesia, immunology, and diagnostic techniques, along with an expanding
repertoire of new drugs, gave medicine an
aura of legitimacy and complexity, and the
therapeutic effectiveness of scientific medicine became widely recognized.
When advanced technical knowledge
becomes essential to practice a profession
and the benefits of professional services
are widely recognized, a greater acceptance
and a legitimate need for the services ofthat
profession are simultaneously created. Cultural nrzrhvzriry refers to the general acceptance of and reliance on the judgment of
the members of a profession (Starr 1982)
because of their superior knowledge and
expertise. Cultural authority legitimizes a
profession in the eyes of common people.
States United the in Services Health of Evolution The I 3 CHAPTER 90
Discoveries Medical Groundbreaking 3-] Exhibit
right. was hunch Semmelweis’s
contamination. prevent to air
was anesthesia of discovery The I of practice the advancing in instrumental surgery.
gas) (laughing oxide Nitrous
anesthesia Ether dentist. a Wells, Horace by extraction tooth for I846 around anesthetic an as employed first was
was anesthesia Before Hospital. General Massachusetts the at I846 in used successfully first was surgery for
as such procedures, do could who surgeon A sensations. the dull to used were alcohol of doses strong discovered,
regard. high in held was time of length shortest the in amputations, limb
Around – the implemented Vienna, in hospital a in practicing physician Hungarian a Semmelweis, Ignaz I847,
death high the about concerned was Semmelweis born. was technique aseptic an Thus, handwashing. of policy
the though Even childbirth. after women among fever puerperal from rate germ unknown was disease of theory
common the and fever puerperal between connection a be might there that surmised Semmelweis time, this at
dissections. doing after right and babies delivering before hands their washing not of students medical by practice
Pasteur Louis I
the pioneering with credited generally is germ I860. around microbiology and disease of theory
withholding and microorganisms kill to boiling as such techniques, sterilization demonstrated Pasteur exposure
to
I antiseptic of father the as to referred often is Iister Joesph surgery. wash to acid carbolic used Iister I865, Around
during (antisepsis) infection of inhibition chemical the popularized and wounds
surgery.
Advances
I Roentgen, Wilhelm by I895 in X-rays of discovery the to traced be can imaging and diagnostics in
first the of Some specialty. medical machine-based first the became Radiology physics. of professor German a
to electricians and photographers attracted States United the in radiography and therapy X-ray in schools training
name). inventor’s the (from Roentgenology in doctors become
I929. in penicillin of properties antibacterial the discovered Fleming Alexander
technol- and science medical in Advances
medi- the on legitimacy this bestowed ogy
practice medical because profession cal
domain the within remain longer no could
competence. oflay
also change technological and c fi Scienti
competence therapeutic improved required
treatment and diagnosis the in physicians of
no was skills these Developing disease. of
train- specialized without possible longer
an created medicine Science-based ing.
services advanced for demand increased
fam- through available longer no were that
neighbors. and ily
fur- was authority cultural Physicians’
decisions medical when bolstered ther
of aspects various in necessary became
physi- example, For delivery. care health
be should person a whether decide cians
and home nursing or hospital a to admitted
nonsur- or surgical whether long, how for
which and used. be should treatments gical
Physi- prescribed. be should medications
on impact profound a have decisions cians’
The alike. nonproviders and providers other
even physicians of opinions and judgment
the outside life person’s a of aspects affect
physi- example, For care. health of delivery
of fitness the evaluate often cians persons
physicals pre—employment during jobs for
assess Physicians demand. employers many
in injured the and ill the of disability the
States United the in Services Health of Evolution The I 3 CHAPTER 90
Discoveries Medical Groundbreaking 3-] Exhibit
right. was hunch Semmelweis’s
contamination. prevent to air
was anesthesia of discovery The I of practice the advancing in instrumental surgery.
gas) (laughing oxide Nitrous
anesthesia Ether dentist. a Wells, Horace by extraction tooth for I846 around anesthetic an as employed first was
was anesthesia Before Hospital. General Massachusetts the at I846 in used successfully first was surgery for
as such procedures, do could who surgeon A sensations. the dull to used were alcohol of doses strong discovered,
regard. high in held was time of length shortest the in amputations, limb
Around – the implemented Vienna, in hospital a in practicing physician Hungarian a Semmelweis, Ignaz I847,
death high the about concerned was Semmelweis born. was technique aseptic an Thus, handwashing. of policy
the though Even childbirth. after women among fever puerperal from rate germ unknown was disease of theory
common the and fever puerperal between connection a be might there that surmised Semmelweis time, this at
dissections. doing after right and babies delivering before hands their washing not of students medical by practice
Pasteur Louis I
the pioneering with credited generally is germ I860. around microbiology and disease of theory
withholding and microorganisms kill to boiling as such techniques, sterilization demonstrated Pasteur exposure
to
I antiseptic of father the as to referred often is Iister Joesph surgery. wash to acid carbolic used Iister I865, Around
during (antisepsis) infection of inhibition chemical the popularized and wounds
surgery.
Advances
I Roentgen, Wilhelm by I895 in X-rays of discovery the to traced be can imaging and diagnostics in
first the of Some specialty. medical machine-based first the became Radiology physics. of professor German a
to electricians and photographers attracted States United the in radiography and therapy X-ray in schools training
name). inventor’s the (from Roentgenology in doctors become
I929. in penicillin of properties antibacterial the discovered Fleming Alexander
technol- and science medical in Advances
medi- the on legitimacy this bestowed ogy
practice medical because profession cal
domain the within remain longer no could
competence. oflay
also change technological and c fi Scienti
competence therapeutic improved required
treatment and diagnosis the in physicians of
no was skills these Developing disease. of
train- specialized without possible longer
an created medicine Science-based ing.
services advanced for demand increased
fam- through available longer no were that
neighbors. and ily
fur- was authority cultural Physicians’
decisions medical when bolstered ther
of aspects various in necessary became
physi- example, For delivery. care health
be should person a whether decide cians
and home nursing or hospital a to admitted
nonsur- or surgical whether long, how for
which and used. be should treatments gical
Physi- prescribed. be should medications
on impact profound a have decisions cians’
The alike. nonproviders and providers other
even physicians of opinions and judgment
the outside life person’s a of aspects affect
physi- example, For care. health of delivery
of fitness the evaluate often cians persons
physicals pre—employment during jobs for
assess Physicians demand. employers many
in injured the and ill the of disability the
workers’ compensation cases. Granting of
medical leave for sickness and release back
to work require authorizations from physicians. Payment of medical claims requires
physicians’ evaluations. Other health care
professionals, such as nurses, therapists,
and dietitians, are expected to follow physicians’ orders for treatment. Thus, during
disease and disability, and sometimes even
in good health, people’s lives have become
increasingly governed by decisions made
by physicians.
lnstilutionolizotion
The evolution of medical technology and
the professionalization of medical and nursing staff enabled advanced treatments that
necessitated the pooling of resources in a
common arena of care (Burns 2004). Rapid
urbanization was another factor that necessitated the institutionalization of medical
care. As had already occurred in Europe,
in the United States, hospitals became the
core around which the delivery of medical
services was organized. Thus, development
of hospitals as the center for the practice of
scientific medicine and the professionalization of medical practice became closely
intertwined.
Indeed, physicians and hospitals developed a symbiotic relationship. For economic reasons, as hospitals expanded, their
survival became increasingly dependent on
physicians to keep the beds filled because
the physicians decided where to hospitalize their patients. Therefore, hospitals had
to make every effort to keep the physicians
satisfied, which enhanced physicians’ professional dominance, even though they were
not employees of the hospitals. This gave
physicians enormous influence over hospital policy. Also, for the first time, hospitals
Medical Services in the Postindustrial far 91
began conforming to both physician practice patterns and public expectations about
medicine as a modern scientific enterprise.
The expansion of surgery, in particular, had
profound implications for hospitals, physicians, and the public. As hospitals added
specialized facilities and Staff, their regular
use became indispensable to physicians and
surgeons, who earlier had been able to manage their practices with little reference to
hospitals (Martensen 1996).
Hospitals in the United States did not
expand and become more directly related
to medical care until the late 18903. However, as late as the 1930s, hospitals incurred
frequent deaths due to infections that could
not be prevented or cured. Nevertheless,
hospital use was on the rise due to the great
influx of immigrants into large American
cities (Falk 1999). From only a few score
in 1875, the number of general hospitals
in the United States expanded to 4,000 by
1900 (Anderson 1990) and to 5,000 by 1913
(Wright 1997).
Dependency
Patients depend on the medical profession’s
judgment and assistance. First, dependency
is created because society expects a sick person to seek medical help and try to get well.
The patient is then expected to comply with
medical instructions. Second, dependency is
created by the profession’s cultural authority because its medical judgments must be
relied on to ( 1) legitimize a person’s sickness; (2) exempt the individual from social
role obligations, such as work or school; and
(3) provide competent medical care so the
person can get well and resume his or her
social role obligations. Third, in conjunction
with the physician’s cultural authority, the
need for hospital services for critical illness
workers’ compensation cases. Granting of
medical leave for sickness and release back
to work require authorizations from physicians. Payment of medical claims requires
physicians’ evaluations. Other health care
professionals, such as nurses, therapists,
and dietitians, are expected to follow physicians’ orders for treatment. Thus, during
disease and disability, and sometimes even
in good health, people’s lives have become
increasingly governed by decisions made
by physicians.
lnstilutionolizotion
The evolution of medical technology and
the professionalization of medical and nursing staff enabled advanced treatments that
necessitated the pooling of resources in a
common arena of care (Burns 2004). Rapid
urbanization was another factor that necessitated the institutionalization of medical
care. As had already occurred in Europe,
in the United States, hospitals became the
core around which the delivery of medical
services was organized. Thus, development
of hospitals as the center for the practice of
scientific medicine and the professionalization of medical practice became closely
intertwined.
Indeed, physicians and hospitals developed a symbiotic relationship. For economic reasons, as hospitals expanded, their
survival became increasingly dependent on
physicians to keep the beds filled because
the physicians decided where to hospitalize their patients. Therefore, hospitals had
to make every effort to keep the physicians
satisfied, which enhanced physicians’ professional dominance, even though they were
not employees of the hospitals. This gave
physicians enormous influence over hospital policy. Also, for the first time, hospitals
Medical Services in the Postindustrial far 91
began conforming to both physician practice patterns and public expectations about
medicine as a modern scientific enterprise.
The expansion of surgery, in particular, had
profound implications for hospitals, physicians, and the public. As hospitals added
specialized facilities and Staff, their regular
use became indispensable to physicians and
surgeons, who earlier had been able to manage their practices with little reference to
hospitals (Martensen 1996).
Hospitals in the United States did not
expand and become more directly related
to medical care until the late 18903. However, as late as the 1930s, hospitals incurred
frequent deaths due to infections that could
not be prevented or cured. Nevertheless,
hospital use was on the rise due to the great
influx of immigrants into large American
cities (Falk 1999). From only a few score
in 1875, the number of general hospitals
in the United States expanded to 4,000 by
1900 (Anderson 1990) and to 5,000 by 1913
(Wright 1997).
Dependency
Patients depend on the medical profession’s
judgment and assistance. First, dependency
is created because society expects a sick person to seek medical help and try to get well.
The patient is then expected to comply with
medical instructions. Second, dependency is
created by the profession’s cultural authority because its medical judgments must be
relied on to ( 1) legitimize a person’s sickness; (2) exempt the individual from social
role obligations, such as work or school; and
(3) provide competent medical care so the
person can get well and resume his or her
social role obligations. Third, in conjunction
with the physician’s cultural authority, the
need for hospital services for critical illness
States United the in Services Health of Evolution The – 3 CHAPTER 92
when dependency creates also surgery and
to homes their from transferred are patients
center. surgery or hospital a
authority cultural physicians’ Once
their of sphere the legitimized, became
aspects all nearly into expanded uence fl in
laws example, For delivery. care health of
from individuals prohibited that passed were
a without drugs of classes certain obtaining
insurance Health prescription. physician’s
were they when only treatments for paid
Thus, physicians. by prescribed or rendered
became insurance health of ciaries fi bene
covered obtain to physicians on dependent
of (gatekeeping) role referral The services.
care managed in physicians care primary
depen- patients’ increased also has plans
refer- for physicians care primary on dency
services. specialized to ral
Organization and Autonomy
to ability physicians’ time, long a For
and hospitals from control of free remain
prominent a remained companies insurance
Hospitals medicine. American of feature
hired have could companies insurance and
ser- medical provide to salary on physicians
took who physicians individual but vices,
cas- were setting corporate a in practice up
and profession medical the by tigated pressome In practices. such abandon to sured
could corporations that ruled courts states,
without physicians licensed employ not
med- of practice unlicensed the in engaging
known became that doctrine legal a icine,
(Farmer doctrine” practice “corporate the as
from Independence 2001). Douglas and
entre- private enhanced control corporate
in physicians American put and preneurship
to relation in position strategic enviable an
a Later, companies. insurance and hospitals
was profession medical organized formally
control resist to position better much a in
entities. outside from
but 1847, in formed was AMA The
half- rst fi its during strength little had it
was membership its existence. of century
and organization permanent no with small,
attain not did AMA The resources. scant
into organized was it until strength real
until and societies medical state and county
delegat- incorporated, were societies state
part As level. local the at control greater ing
also AMA the reform, organizational the of
on attention concentrate to 1904, in began,
Harvey and (Bordley education medical
pro- chief the been has it then, Since 1976).
conventional of practitioners the for ponent
Although States. United the in medicine
of importance the stressed often AMA the
patients for care of quality the raising
consumer uninformed the protecting and
prin- its “charlatans,” and “quacks” from
profes- other of that goal—like cipal
the advance to associations-—-was sional
nancial fi and prestige, professionalization,
vig- AMA The members. its of well-being
promoting by objectives its pursued orously
licens- medical state of establishment the
to that, requirement legal the and laws ing
be must physician a practice, to licensed be
medical AMA-approved an of graduate a
physicians of activities concerted The school.
to referred collectively are AMA the through
them distinguish to ma.-dir’irre*, rargurrired as
individual of actions uncoordinated the from
marketplace the in competing physicians
1992). Musgrave and (Goodman
Licensing
estab- Acts Practice Medical the Under
in licensure medical 1870s, the in lished
the of .lI‘lCtl01’l fi a became States United the
had states 26 1896, By 1971). (Stevens states
States United the in Services Health of Evolution The – 3 CHAPTER 92
when dependency creates also surgery and
to homes their from transferred are patients
center. surgery or hospital a
authority cultural physicians’ Once
their of sphere the legitimized, became
aspects all nearly into expanded uence fl in
laws example, For delivery. care health of
from individuals prohibited that passed were
a without drugs of classes certain obtaining
insurance Health prescription. physician’s
were they when only treatments for paid
Thus, physicians. by prescribed or rendered
became insurance health of ciaries fi bene
covered obtain to physicians on dependent
of (gatekeeping) role referral The services.
care managed in physicians care primary
depen- patients’ increased also has plans
refer- for physicians care primary on dency
services. specialized to ral
Organization and Autonomy
to ability physicians’ time, long a For
and hospitals from control of free remain
prominent a remained companies insurance
Hospitals medicine. American of feature
hired have could companies insurance and
ser- medical provide to salary on physicians
took who physicians individual but vices,
cas- were setting corporate a in practice up
and profession medical the by tigated pressome In practices. such abandon to sured
could corporations that ruled courts states,
without physicians licensed employ not
med- of practice unlicensed the in engaging
known became that doctrine legal a icine,
(Farmer doctrine” practice “corporate the as
from Independence 2001). Douglas and
entre- private enhanced control corporate
in physicians American put and preneurship
to relation in position strategic enviable an
a Later, companies. insurance and hospitals
was profession medical organized formally
control resist to position better much a in
entities. outside from
but 1847, in formed was AMA The
half- rst fi its during strength little had it
was membership its existence. of century
and organization permanent no with small,
attain not did AMA The resources. scant
into organized was it until strength real
until and societies medical state and county
delegat- incorporated, were societies state
part As level. local the at control greater ing
also AMA the reform, organizational the of
on attention concentrate to 1904, in began,
Harvey and (Bordley education medical
pro- chief the been has it then, Since 1976).
conventional of practitioners the for ponent
Although States. United the in medicine
of importance the stressed often AMA the
patients for care of quality the raising
consumer uninformed the protecting and
prin- its “charlatans,” and “quacks” from
profes- other of that goal—like cipal
the advance to associations-—-was sional
nancial fi and prestige, professionalization,
vig- AMA The members. its of well-being
promoting by objectives its pursued orously
licens- medical state of establishment the
to that, requirement legal the and laws ing
be must physician a practice, to licensed be
medical AMA-approved an of graduate a
physicians of activities concerted The school.
to referred collectively are AMA the through
them distinguish to ma.-dir’irre*, rargurrired as
individual of actions uncoordinated the from
marketplace the in competing physicians
1992). Musgrave and (Goodman
Licensing
estab- Acts Practice Medical the Under
in licensure medical 1870s, the in lished
the of .lI‘lCtl01’l fi a became States United the
had states 26 1896, By 1971). (Stevens states
enacted medical licensure laws (Anderson
1990). Licensing of physicians and upgrading of medical school standards developed
hand in hand. At first, licensing required
only a medical school diploma. Later, candidates could be rejected ifthe school they
had attended was judged inadequate (Starr
1982). Through both licensure and upgrading of medical school standards, physicians
obtained a clear monopoly on the practice of
medicine (Anderson 1990). The early licensing laws served to protect physicians from
the competitive pressures posed by potential
new entrants into the medical profession.
Physicians led the campaign to restrict the
practice of medicine. As biomedicine gained
political and economic ground, the biomedical community expelled providers such as
homeopaths, naturopaths, and chiropractors
from medical societies; prohibited professional association with them; and encouraged
prosecution of such providers for unlicensed
medical practice (Rothstein 1972). In 1888,
in a landmark Supreme Court decision, Dent
v. West Virginia, Justice Stephen J. Field
wrote that no one had the right to practice
“without having the necessary qualifications
of learning and skill” (Haber 1974). In the
late 1880s and 1890s, many states revised
laws to require all candidates for licensure,
including those holding medical degrees, to
pass an examination (Kaufman 1980).
Educational Relorm
Reform ofmedical education started around
1870, with the affiliation of medical schools
with universities. In 1871, Harvard Medical
School, under the leadership of a new university president, Charles Eliot, completely
revolutionized the system of medical education. The academic year was extended from
4 to 9 months, and the length of medical
Medical Services in the Postindustriol Ere 93
education was increased from 2 to 3 years.
Following the European model, laboratory instruction and clinical subjects, such
as chemistry, physiology, anatomy, and
pathology, were added to the curriculum.
Johns Hopkins University took the
lead in further reforming medical education when it opened its medical school in
1893, under the leadership of William H.
Welch, who trained in Germany. Medical education, for the first time, became a
graduate training course, requiring a college degree, not a high school diploma, as
an entrance requirement. Johns Hopkins
had well equipped laboratories, a full-time
faculty for the basic science courses, and
its own teaching hospital (Rothstein 1972).
Standards at Johns Hopkins became the
model of medical education in other leading
institutions around the country. The raising
of standards made it difficult for proprietary
schools to survive, and, in time, proprietary
schools were closed.
The Association of American Medical
Colleges (AAMC) was founded in 1876
by 22 medical schools (Coggeshall 1965).
Later, the AAMC set minimum standards for
medical education, including a 4-year curriculum, but it was unable to enforce its recommendations. In 1904, the AMA created
the Council on Medical Education, which
inspected the existing medical schools and
found that less than half provided acceptable levels of training. The AMA did not
publish its findings but obtained the help of
the Carnegie Foundation for the Advancement ofTeaching to provide a rating ofmedical schools (Goodman and Musgrave 1992).
The Foundation appointed Abraham Flexner
to investigate medical schools located in
both the United States and Canada. The
Flexner Report, published in 1910, had a profound effect on medical education reform.
enacted medical licensure laws (Anderson
1990). Licensing of physicians and upgrading of medical school standards developed
hand in hand. At first, licensing required
only a medical school diploma. Later, candidates could be rejected ifthe school they
had attended was judged inadequate (Starr
1982). Through both licensure and upgrading of medical school standards, physicians
obtained a clear monopoly on the practice of
medicine (Anderson 1990). The early licensing laws served to protect physicians from
the competitive pressures posed by potential
new entrants into the medical profession.
Physicians led the campaign to restrict the
practice of medicine. As biomedicine gained
political and economic ground, the biomedical community expelled providers such as
homeopaths, naturopaths, and chiropractors
from medical societies; prohibited professional association with them; and encouraged
prosecution of such providers for unlicensed
medical practice (Rothstein 1972). In 1888,
in a landmark Supreme Court decision, Dent
v. West Virginia, Justice Stephen J. Field
wrote that no one had the right to practice
“without having the necessary qualifications
of learning and skill” (Haber 1974). In the
late 1880s and 1890s, many states revised
laws to require all candidates for licensure,
including those holding medical degrees, to
pass an examination (Kaufman 1980).
Educational Relorm
Reform ofmedical education started around
1870, with the affiliation of medical schools
with universities. In 1871, Harvard Medical
School, under the leadership of a new university president, Charles Eliot, completely
revolutionized the system of medical education. The academic year was extended from
4 to 9 months, and the length of medical
Medical Services in the Postindustriol Ere 93
education was increased from 2 to 3 years.
Following the European model, laboratory instruction and clinical subjects, such
as chemistry, physiology, anatomy, and
pathology, were added to the curriculum.
Johns Hopkins University took the
lead in further reforming medical education when it opened its medical school in
1893, under the leadership of William H.
Welch, who trained in Germany. Medical education, for the first time, became a
graduate training course, requiring a college degree, not a high school diploma, as
an entrance requirement. Johns Hopkins
had well equipped laboratories, a full-time
faculty for the basic science courses, and
its own teaching hospital (Rothstein 1972).
Standards at Johns Hopkins became the
model of medical education in other leading
institutions around the country. The raising
of standards made it difficult for proprietary
schools to survive, and, in time, proprietary
schools were closed.
The Association of American Medical
Colleges (AAMC) was founded in 1876
by 22 medical schools (Coggeshall 1965).
Later, the AAMC set minimum standards for
medical education, including a 4-year curriculum, but it was unable to enforce its recommendations. In 1904, the AMA created
the Council on Medical Education, which
inspected the existing medical schools and
found that less than half provided acceptable levels of training. The AMA did not
publish its findings but obtained the help of
the Carnegie Foundation for the Advancement ofTeaching to provide a rating ofmedical schools (Goodman and Musgrave 1992).
The Foundation appointed Abraham Flexner
to investigate medical schools located in
both the United States and Canada. The
Flexner Report, published in 1910, had a profound effect on medical education reform.
States United the in Services Health of Evolution The – 3 CHAPTER 94
both by accepted widely was report The
that Schools public. the and profession the
were standards proposed the meet not did
established, were laws State close. to forced
school medical a from graduation requiring
a for basis the as AMA the by accredited
and (Haglund medicine practice to license
1993). Dowling
education graduate advanced Once
train- medical of part integral an became
profession’s the legitimized further it ing,
sovereignty. its galvanized and authority
medi- American that noted (1971) Stevens
maturity professional toward moved cine
direct a as mainly 1914, and 1890 between
reform. educational of result
Medicine in Specialization
of hallmark key a been has Specialization
in comparison, a As medicine. American
United the in physicians all of 17% 1931,
the today, whereas specialists, were States
is generalists to specialists of proportion
Sta- Labor of (Bureau 58:42 approximately
have also generalists many and 1), 201 tistics
allied of growth The focus. subspecialty a
diversi- also has professionals care health
specialization—such medical in both fied,
technologists, radiological and laboratory as
therapists-— physical and anesthetists, nurse
specialized expanded or new in as well as
therapists, occupational as elds——such fi
social medical and dietitians, psychologists,
1971). (Stevens workers
medi- of coordination rational a of Lack
one been has States United the in care cal
with preoccupation the of consequence
the of characteristics The specialization.
countries various in profession medical
attributes key the define and shape often
The systems. delivery care health their of
(PCP), physician care primary the of role
and generalists between relationship the
general- practicing of ratio the specialists,
of nature and structure the specialists, to ists
and hospitals, in appointments staff medical
medicine of practice group to approach the
struc- evolving the by molded been all have
In profession. medical the of ethos and ture
profes- medical the example, for Britain,
practi- general into itself divided has sion
community the in practicing (GPs) tioners
positions specialist holding consultants and
did cation fi strati of kind This hospitals. in
PCPS medicine. American in develop not
that role the assigned not were America in
could patients where Britain, in had GPs
from referral by only specialist a consult
a hold GPs where Britain, Unlike GP. a
the to relation in position intermediary key
the system, delivery care health the of rest
gatekeep- a such lacked has States United
under 1990s, early the since Only role. ing
(HMOS), organizations maintenance health
initial requiring model grrrcrkeripirrg the has
generalist’s the and generalist a with contact
prominence. gained specialist a to referral
practice medical of shaping distinctive The
struc- the why explains States United the in
a around develop not did medicine of ture
care. primary of nucleus
Community to Asylum the From
Health Mental
sci- the century, 20th the of turn the At
ill- mental of treatment and study cfi enti
just had neuropathology, called nesses,
was funding federal 1946, in Later, begun.
Mental National the under available made
and education psychiatric for Act Health
in creation, the to led Act This research.
Mental of Institute National the of 1949,
mental of treatment Early (NIMH). Health
concept the and championed, was disorders
States United the in Services Health of Evolution The – 3 CHAPTER 94
both by accepted widely was report The
that Schools public. the and profession the
were standards proposed the meet not did
established, were laws State close. to forced
school medical a from graduation requiring
a for basis the as AMA the by accredited
and (Haglund medicine practice to license
1993). Dowling
education graduate advanced Once
train- medical of part integral an became
profession’s the legitimized further it ing,
sovereignty. its galvanized and authority
medi- American that noted (1971) Stevens
maturity professional toward moved cine
direct a as mainly 1914, and 1890 between
reform. educational of result
Medicine in Specialization
of hallmark key a been has Specialization
in comparison, a As medicine. American
United the in physicians all of 17% 1931,
the today, whereas specialists, were States
is generalists to specialists of proportion
Sta- Labor of (Bureau 58:42 approximately
have also generalists many and 1), 201 tistics
allied of growth The focus. subspecialty a
diversi- also has professionals care health
specialization—such medical in both fied,
technologists, radiological and laboratory as
therapists-— physical and anesthetists, nurse
specialized expanded or new in as well as
therapists, occupational as elds——such fi
social medical and dietitians, psychologists,
1971). (Stevens workers
medi- of coordination rational a of Lack
one been has States United the in care cal
with preoccupation the of consequence
the of characteristics The specialization.
countries various in profession medical
attributes key the define and shape often
The systems. delivery care health their of
(PCP), physician care primary the of role
and generalists between relationship the
general- practicing of ratio the specialists,
of nature and structure the specialists, to ists
and hospitals, in appointments staff medical
medicine of practice group to approach the
struc- evolving the by molded been all have
In profession. medical the of ethos and ture
profes- medical the example, for Britain,
practi- general into itself divided has sion
community the in practicing (GPs) tioners
positions specialist holding consultants and
did cation fi strati of kind This hospitals. in
PCPS medicine. American in develop not
that role the assigned not were America in
could patients where Britain, in had GPs
from referral by only specialist a consult
a hold GPs where Britain, Unlike GP. a
the to relation in position intermediary key
the system, delivery care health the of rest
gatekeep- a such lacked has States United
under 1990s, early the since Only role. ing
(HMOS), organizations maintenance health
initial requiring model grrrcrkeripirrg the has
generalist’s the and generalist a with contact
prominence. gained specialist a to referral
practice medical of shaping distinctive The
struc- the why explains States United the in
a around develop not did medicine of ture
care. primary of nucleus
Community to Asylum the From
Health Mental
sci- the century, 20th the of turn the At
ill- mental of treatment and study cfi enti
just had neuropathology, called nesses,
was funding federal 1946, in Later, begun.
Mental National the under available made
and education psychiatric for Act Health
in creation, the to led Act This research.
Mental of Institute National the of 1949,
mental of treatment Early (NIMH). Health
concept the and championed, was disorders
of community mental health was bom. By
this time, new drugs for treating psychosis and depression had become available.
Reformers of the mental health system
argued that long—term institutional care had
been neglectful, ineffective, and even harmful (US Surgeon General 1999). Passage of
the Community Mental Health Centers Act
of 1963 lent support to the joint policies of
“community care” and “deinstitutionalization.” From 1970 to 2000, state-run psychiatric hospital beds dropped from 207 to
21 beds per 100,000 population (lVlanderscheid et al. 2004). The deinstitutionalization
movement further intensified after the 1999
US Supreme Court decision in Olmsrecrd
v. L.C. that directed US states to provide
community-based services to people with
mental illness. Today, state mental institutions provide long-term treatment to people
with severe and persistent mental illness
(Patrick et al. 2006).
Development of Public Health
Historically, public health practices in the
United States have concentrated on sanitary regulation, the study of epidemics,
and vital statistics. The growth of urban
centers for the purpose of commerce and
industry, unsanitary living conditions in
densely populated areas, inadequate methods of sewage and garbage disposal, limited
access to clean water, and long work hours
in unsafe and exploitative industries led to
periodic epidemics of cholera, smallpox,
typhoid, tuberculosis, yellow fever, and
other diseases. Such outbreaks led to arduous efforts to protect the public interest. For
example, in 1793, the national capital had
to be moved out of Philadelphia due to a
devastating outbreak of yellow fever. This
epidemic prompted the city to develop its
Medical Services in the Pestindustrial Era 95
first board ofhealth that same year. In 1850,
Lemuel Shattuck outlined the blueprint for
the development of a public health system
in Massachusetts. Shattuck also called for
the establishment of state and local health
departments. A threatening outbreak of
cholera in 1873 mobilized the New York
City Health Department to alleviate the
worst sanitary conditions within the city.
Previously, cholera epidemics in 1832 and
1848-1849 had swept through American
cities and towns within a few weeks, killing
thousands (Duffy 1971). Until about 1900,
infectious diseases posed the greatest health
threat to society. The development of public health played a major role in curtailing
the spread of infection among populations.
Simultaneously, widespread public health
measures and better medical care reduced
mortality and increased life expectancy.
By 1900, most states had health departments that were responsible for a variety
of public health efforts, such as sanitary
inspections, communicable disease control,
operation of state laboratories, vital statistics, health education, and regulation offood
and water (Turnock 1997; Williams 1995).
Public health functions were later extended
to fill gaps in the medical care system. Such
functions, however, were limited mainly to
child immunizations, care of mothers and
infants, health screening in public schools,
and family planning. Federal grants were
also made available to state and local governments for programs in substance abuse,
mental health, and community prevention
services (Turnock 1997).
Public health has remainedseparatefrom
the private practice of medicine because of
the skepticism of private physicians that the
government could use the boards of health
to control the supply of physicians and to
regulate the private practice of medicine
of community mental health was bom. By
this time, new drugs for treating psychosis and depression had become available.
Reformers of the mental health system
argued that long—term institutional care had
been neglectful, ineffective, and even harmful (US Surgeon General 1999). Passage of
the Community Mental Health Centers Act
of 1963 lent support to the joint policies of
“community care” and “deinstitutionalization.” From 1970 to 2000, state-run psychiatric hospital beds dropped from 207 to
21 beds per 100,000 population (lVlanderscheid et al. 2004). The deinstitutionalization
movement further intensified after the 1999
US Supreme Court decision in Olmsrecrd
v. L.C. that directed US states to provide
community-based services to people with
mental illness. Today, state mental institutions provide long-term treatment to people
with severe and persistent mental illness
(Patrick et al. 2006).
Development of Public Health
Historically, public health practices in the
United States have concentrated on sanitary regulation, the study of epidemics,
and vital statistics. The growth of urban
centers for the purpose of commerce and
industry, unsanitary living conditions in
densely populated areas, inadequate methods of sewage and garbage disposal, limited
access to clean water, and long work hours
in unsafe and exploitative industries led to
periodic epidemics of cholera, smallpox,
typhoid, tuberculosis, yellow fever, and
other diseases. Such outbreaks led to arduous efforts to protect the public interest. For
example, in 1793, the national capital had
to be moved out of Philadelphia due to a
devastating outbreak of yellow fever. This
epidemic prompted the city to develop its
Medical Services in the Pestindustrial Era 95
first board ofhealth that same year. In 1850,
Lemuel Shattuck outlined the blueprint for
the development of a public health system
in Massachusetts. Shattuck also called for
the establishment of state and local health
departments. A threatening outbreak of
cholera in 1873 mobilized the New York
City Health Department to alleviate the
worst sanitary conditions within the city.
Previously, cholera epidemics in 1832 and
1848-1849 had swept through American
cities and towns within a few weeks, killing
thousands (Duffy 1971). Until about 1900,
infectious diseases posed the greatest health
threat to society. The development of public health played a major role in curtailing
the spread of infection among populations.
Simultaneously, widespread public health
measures and better medical care reduced
mortality and increased life expectancy.
By 1900, most states had health departments that were responsible for a variety
of public health efforts, such as sanitary
inspections, communicable disease control,
operation of state laboratories, vital statistics, health education, and regulation offood
and water (Turnock 1997; Williams 1995).
Public health functions were later extended
to fill gaps in the medical care system. Such
functions, however, were limited mainly to
child immunizations, care of mothers and
infants, health screening in public schools,
and family planning. Federal grants were
also made available to state and local governments for programs in substance abuse,
mental health, and community prevention
services (Turnock 1997).
Public health has remainedseparatefrom
the private practice of medicine because of
the skepticism of private physicians that the
government could use the boards of health
to control the supply of physicians and to
regulate the private practice of medicine
States United the in Services Health of Evolution The – 3 CHAPTER 96
inter- government of Fear 1972). (Rothstein
of erosion and autonomy, of loss vention,
sepa- of wall a created incomes personal
private and health public between ration
dichotomous this Under practice. medical
concentrated has medicine relationship,
individual, the of health physical the on
the on focused has health public whereas
communi- and populations whole of health
between collaboration of extent The ties.
the to ned fi con largely been has two the
departments health public by requirement
of cases report practitioners private that
trans- sexually as such diseases, contagious
ciency fi immunode human diseases, mitted
immune acquired and infection, (HIV) virus
out- any and (AIDS), syndrome ciency fi de
and virus Nile West as such cases of breaks
infections. of types other
Veterans for Services Health
government the I, War World after Shortly
veter- to services hospital provide to started
for and disabilities service-related with ans
veteran the if disabilities nonservice-related
care. private for pay to inability an declared
con- government federal the rst, fi At
hospitals, private with services for tracted
Veterans of Department the time, over but,
Administra- Veterans called (formerly Affairs
clin- outpatient hospitals, own its built tion)
health current The homes. nursing and ics,
6. Chapter in discussed is veterans for system
Compensation Workers’ of Birth
insurance health broad-coverage first The
of fonn the in emerged States United the in
in initiated programs compensation workers’
underlying theory The 1993). (Whitted 1914
accidents all that is compensation workers’
employment of course the during occur that
the to attributable directly illnesses all and
indus- of risks as regarded be must workplace
nan- fi is employer the words, other In try.
injuries such of cost ill fi the for liable cially
fault. at is who of regardless illnesses and
originally was compensation Workers’
workers to payments cash with concerned
injuries job-related to due lost wages for
medical for Compensation disease. and
survivors the to ts fi bene death and expenses
some trend, the at Looking added. later were
Americans since that, believed reformers
compulsory adopt to persuaded been had
they accidents, industrial against insurance
compul- adopt to persuaded be also could
Workers’ sickness. against insurance sory
for balloon trial a as served compensation
universal government-sponsored, of idea the
How- States. United the in insurance health
insurance, health private of growth the ever,
later, discussed factors key other with along
national a for proposals any prevented has
hold. taking from program care health
Insurance Health Private of Rise
commonly was insurance health Private
r’rrsurcmc’e, Irealrfr 1-vrlrmrcrrgv as to referred
government- a for proposals to contrast in
sys- insurance health compulsory sponsored
limited coverage insurance private Some tem.
approx- since available was injuries bodily to
poli- insurance health 1900, By 1850. imately
role initial their but available, became cies
during income of loss against protect to was
(Whitted disability temporary and sickness
surgical for added was coverage Later, 1993).
lost replacing on remained emphasis but fees,
reality, in was, coverage the Thus, income.
insur- health than rather insurance disability
1984). Mayer and (Mayer ance
sections, subsequent in detailed As
factors economic and social, technological,
States United the in Services Health of Evolution The – 3 CHAPTER 96
inter- government of Fear 1972). (Rothstein
of erosion and autonomy, of loss vention,
sepa- of wall a created incomes personal
private and health public between ration
dichotomous this Under practice. medical
concentrated has medicine relationship,
individual, the of health physical the on
the on focused has health public whereas
communi- and populations whole of health
between collaboration of extent The ties.
the to ned fi con largely been has two the
departments health public by requirement
of cases report practitioners private that
trans- sexually as such diseases, contagious
ciency fi immunode human diseases, mitted
immune acquired and infection, (HIV) virus
out- any and (AIDS), syndrome ciency fi de
and virus Nile West as such cases of breaks
infections. of types other
Veterans for Services Health
government the I, War World after Shortly
veter- to services hospital provide to started
for and disabilities service-related with ans
veteran the if disabilities nonservice-related
care. private for pay to inability an declared
con- government federal the rst, fi At
hospitals, private with services for tracted
Veterans of Department the time, over but,
Administra- Veterans called (formerly Affairs
clin- outpatient hospitals, own its built tion)
health current The homes. nursing and ics,
6. Chapter in discussed is veterans for system
Compensation Workers’ of Birth
insurance health broad-coverage first The
of fonn the in emerged States United the in
in initiated programs compensation workers’
underlying theory The 1993). (Whitted 1914
accidents all that is compensation workers’
employment of course the during occur that
the to attributable directly illnesses all and
indus- of risks as regarded be must workplace
nan- fi is employer the words, other In try.
injuries such of cost ill fi the for liable cially
fault. at is who of regardless illnesses and
originally was compensation Workers’
workers to payments cash with concerned
injuries job-related to due lost wages for
medical for Compensation disease. and
survivors the to ts fi bene death and expenses
some trend, the at Looking added. later were
Americans since that, believed reformers
compulsory adopt to persuaded been had
they accidents, industrial against insurance
compul- adopt to persuaded be also could
Workers’ sickness. against insurance sory
for balloon trial a as served compensation
universal government-sponsored, of idea the
How- States. United the in insurance health
insurance, health private of growth the ever,
later, discussed factors key other with along
national a for proposals any prevented has
hold. taking from program care health
Insurance Health Private of Rise
commonly was insurance health Private
r’rrsurcmc’e, Irealrfr 1-vrlrmrcrrgv as to referred
government- a for proposals to contrast in
sys- insurance health compulsory sponsored
limited coverage insurance private Some tem.
approx- since available was injuries bodily to
poli- insurance health 1900, By 1850. imately
role initial their but available, became cies
during income of loss against protect to was
(Whitted disability temporary and sickness
surgical for added was coverage Later, 1993).
lost replacing on remained emphasis but fees,
reality, in was, coverage the Thus, income.
insur- health than rather insurance disability
1984). Mayer and (Mayer ance
sections, subsequent in detailed As
factors economic and social, technological,
created a general need for health insurance. However, economic conditions that
prompted private initiatives, self—interests
of a well organized medical profession, and
the momentum of a successful health insurance enterprise gave private health insurance a firm footing in the United States.
Coverage for hospital and physician services began separately and was later combined under the auspices of Blue Cross and
Blue Shield. Later, economic conditions
during the World War 11 period laid the
foundations for health insurance to become
an employment-based benefit.
Technological, Social, and
Economic Factors
The health insurance movement ofthe early
20th century was the product of three converging developments: the technological,
the social, and the economic. From a technological perspective, medicine offered new
and better treatments. Because of its well
established healing values, medical care
had become individually and socially desirable, which created a growing demand for
medical services. From an economic perspective, people could predict neither their
future needs for medical care nor the costs,
both of which had been gradually increasing. In short, scientific and technological
advances made health care more desirable
but less affordable. These developments
pointed to the need for some kind of insurance that could spread the financial risks
over a large number of people.
Early Blanket Insurance Policies
In 191 1, insurance companies began to offer
blanket policies for large industrial populations, usually covering life insurance,
Medical Services in the Pasiiadustrial Era 97
accidents and sickness, and nursing services.
A few industrial and railroad companies set
up their own medical plans, covering specified medical benefits, as did several unions
and fraternal orders; however, the total
amount of voluntary health insurance was
minute (Stevens 1971).
Economic Necessity and the Baylor Plan
The Great Depression, which started at the
end of 1929, forced hospitals to turn from
philanthropic donations to patient fees for
support. Patients now faced not only loss of
income from illness but also increased debt
from medical care costs when they became
sick. People needed protection from the
economic consequences of sickness and
hospitalization. Hospitals also needed protection from economic instability (Mayer
and Mayer 1984). During the Depression,
occupancy rates in hospitals fell, income
from endowments and contributions
dropped sharply, and the charity patient
load almost quadrupled (Richardson 1945).
In 1929, the blueprint for modern health
insurance was established when Justin F.
Kimball began a hospital insurance plan for
public school teachers at the Baylor University Hospital in Dallas, Texas. Kimball was
able to enroll more than 1,200 teachers, who
paid 50 cents a month for a maximum of
21 days of hospital care. Within a few years,
it became the model for Blue Cross plans
around the country (Raffel 1980). At first,
other independent hospitals copied Baylor
and started offering single—hospital plans. It
was not long before community—wide plans,
offered jointly by more than one hospital,
became popular because they provided consumers a choice of hospitals. The hospitals agreed to provide services in exchange
for a fixed monthly payment by the plans.
created a general need for health insurance. However, economic conditions that
prompted private initiatives, self—interests
of a well organized medical profession, and
the momentum of a successful health insurance enterprise gave private health insurance a firm footing in the United States.
Coverage for hospital and physician services began separately and was later combined under the auspices of Blue Cross and
Blue Shield. Later, economic conditions
during the World War 11 period laid the
foundations for health insurance to become
an employment-based benefit.
Technological, Social, and
Economic Factors
The health insurance movement ofthe early
20th century was the product of three converging developments: the technological,
the social, and the economic. From a technological perspective, medicine offered new
and better treatments. Because of its well
established healing values, medical care
had become individually and socially desirable, which created a growing demand for
medical services. From an economic perspective, people could predict neither their
future needs for medical care nor the costs,
both of which had been gradually increasing. In short, scientific and technological
advances made health care more desirable
but less affordable. These developments
pointed to the need for some kind of insurance that could spread the financial risks
over a large number of people.
Early Blanket Insurance Policies
In 191 1, insurance companies began to offer
blanket policies for large industrial populations, usually covering life insurance,
Medical Services in the Pasiiadustrial Era 97
accidents and sickness, and nursing services.
A few industrial and railroad companies set
up their own medical plans, covering specified medical benefits, as did several unions
and fraternal orders; however, the total
amount of voluntary health insurance was
minute (Stevens 1971).
Economic Necessity and the Baylor Plan
The Great Depression, which started at the
end of 1929, forced hospitals to turn from
philanthropic donations to patient fees for
support. Patients now faced not only loss of
income from illness but also increased debt
from medical care costs when they became
sick. People needed protection from the
economic consequences of sickness and
hospitalization. Hospitals also needed protection from economic instability (Mayer
and Mayer 1984). During the Depression,
occupancy rates in hospitals fell, income
from endowments and contributions
dropped sharply, and the charity patient
load almost quadrupled (Richardson 1945).
In 1929, the blueprint for modern health
insurance was established when Justin F.
Kimball began a hospital insurance plan for
public school teachers at the Baylor University Hospital in Dallas, Texas. Kimball was
able to enroll more than 1,200 teachers, who
paid 50 cents a month for a maximum of
21 days of hospital care. Within a few years,
it became the model for Blue Cross plans
around the country (Raffel 1980). At first,
other independent hospitals copied Baylor
and started offering single—hospital plans. It
was not long before community—wide plans,
offered jointly by more than one hospital,
became popular because they provided consumers a choice of hospitals. The hospitals agreed to provide services in exchange
for a fixed monthly payment by the plans.
States United the in Services Health of Evolution The – 3 CHAPTER 98
plans prepaid were these essence, in Hence,
con- a is plat: prrrpcrid A services. hospital for
provider a which under arrangement tractual
group a to services needed all provide must
a for exchange in enrollees) (or members of
advance. in paid fee monthly xed fi
Enterprise- Private Successful
Plans Cross Blue Tlie
rst fi the was Minnesota in plan hospital A
(Davis 1933 in Cross Blue name the use to
Association Hospital American The 1996).
and plans hospital the to support lent (AHA)
unite to agency coordinating the became
network Cross Blue the into plans these
Cross Blue The 1980). Raffel 1993; (Koch
had they is, t——that fi nonpro were plans
t fi pro receive would who shareholders no
hospital only covered distributions—and
of domain the on infringe to not as charges,
1982). (Starr physicians private
trans- was plans the of control Later,
body, independent completely a to ferred
sub- which Commission, Cross Blue the
Asso- Cross Blue the became sequently
Cross Blue 1946, In 1980). (Raffel ciation
mem- million 20 served states 43 in plans
the alone, 1950 and 1940 Between bers.
by covered population the of proportion
to 9% from increased insurance hospital
1990). (Anderson 57%
Physicians- of Sell-Interests
Shield Blue of Birth
received had insurance health Voluntary
AMA the but endorsement, AMA’s the
health private that clear it made also had
hos- only include should plans insurance
surprising not therefore, is, It care. pital
to designed plan Shield Blue first the that
the by started was bills physicians’ for pay
estab- which Association, Medical California
in Service Physicians’ California the lished
hospital endorsing By 1980). (Raffel 1939
medi- developing actively by and insurance
profession medical the plans, service cal
insurance health private to itself committed
of risk nancial fi the spread to means the as
interests own its that ensure to and sickness
threatened. be not would
of point profession’s medical the From
con- in insurance, health voluntary view,
practice fee-for-service private with junction
desirable a as regarded was physicians, by
system care health evolving the of feature
Shield Blue the Throughout 1971). (Stevens
boards the dominated physicians movement,
under- they because only not directors of
plans the because also but plans the wrote
to response their sense, real very a in were,
In insurance. health national of challenge the
stipula- AMA’s the met plans the addition,
hands the in matters medical keeping of tion
1994). Raffel and (Raffel physicians of
Hospital Combined
Coverage Physician and
Shield Blue and Cross Blue though Even
nan- fi were and independently developed
they distinct, organizationally and cially
hospi- provide to together worked often
In 1974). (Law coverage physician and tal
Insur- of Superintendent York New the 1974,
Cross Blue the of merger a approved ance
York New Greater of plans Shield Blue and
simi- then, Since 1977). Somers and (Somers
and states, most in occurred have mergers lar
Blue and Cross Blue state every nearly in
have or corporations joint are plans Shield
1996). (Davis relationships working close
companies insurance tfi for-pro The
Cross Blue the of skeptical initially were
attitude. wait—and-see a adopted and plans
States United the in Services Health of Evolution The – 3 CHAPTER 98
plans prepaid were these essence, in Hence,
con- a is plat: prrrpcrid A services. hospital for
provider a which under arrangement tractual
group a to services needed all provide must
a for exchange in enrollees) (or members of
advance. in paid fee monthly xed fi
Enterprise- Private Successful
Plans Cross Blue Tlie
rst fi the was Minnesota in plan hospital A
(Davis 1933 in Cross Blue name the use to
Association Hospital American The 1996).
and plans hospital the to support lent (AHA)
unite to agency coordinating the became
network Cross Blue the into plans these
Cross Blue The 1980). Raffel 1993; (Koch
had they is, t——that fi nonpro were plans
t fi pro receive would who shareholders no
hospital only covered distributions—and
of domain the on infringe to not as charges,
1982). (Starr physicians private
trans- was plans the of control Later,
body, independent completely a to ferred
sub- which Commission, Cross Blue the
Asso- Cross Blue the became sequently
Cross Blue 1946, In 1980). (Raffel ciation
mem- million 20 served states 43 in plans
the alone, 1950 and 1940 Between bers.
by covered population the of proportion
to 9% from increased insurance hospital
1990). (Anderson 57%
Physicians- of Sell-Interests
Shield Blue of Birth
received had insurance health Voluntary
AMA the but endorsement, AMA’s the
health private that clear it made also had
hos- only include should plans insurance
surprising not therefore, is, It care. pital
to designed plan Shield Blue first the that
the by started was bills physicians’ for pay
estab- which Association, Medical California
in Service Physicians’ California the lished
hospital endorsing By 1980). (Raffel 1939
medi- developing actively by and insurance
profession medical the plans, service cal
insurance health private to itself committed
of risk nancial fi the spread to means the as
interests own its that ensure to and sickness
threatened. be not would
of point profession’s medical the From
con- in insurance, health voluntary view,
practice fee-for-service private with junction
desirable a as regarded was physicians, by
system care health evolving the of feature
Shield Blue the Throughout 1971). (Stevens
boards the dominated physicians movement,
under- they because only not directors of
plans the because also but plans the wrote
to response their sense, real very a in were,
In insurance. health national of challenge the
stipula- AMA’s the met plans the addition,
hands the in matters medical keeping of tion
1994). Raffel and (Raffel physicians of
Hospital Combined
Coverage Physician and
Shield Blue and Cross Blue though Even
nan- fi were and independently developed
they distinct, organizationally and cially
hospi- provide to together worked often
In 1974). (Law coverage physician and tal
Insur- of Superintendent York New the 1974,
Cross Blue the of merger a approved ance
York New Greater of plans Shield Blue and
simi- then, Since 1977). Somers and (Somers
and states, most in occurred have mergers lar
Blue and Cross Blue state every nearly in
have or corporations joint are plans Shield
1996). (Davis relationships working close
companies insurance tfi for-pro The
Cross Blue the of skeptical initially were
attitude. wait—and-see a adopted and plans
Their apprehension was justified because
no actuarial information was available to
predict losses. But within a few years, lured
by the success ofthe Blue Cross plans, commercial insurance companies also started
offering health insurance.
Employment-Based Health Insurance
Between 1916 and 1918, 16 state legislatures, including New York and California,
attempted to enact legislation mandating
employers to provide health insurance,
but these efforts were unsuccessful (Davis
1996). Subsequently, three main developments pushed private health insurance to
become employment based in the United
States: (1) To control high inflation in
the economy during the World War 11
period, Congress imposed wage freezes. In
response, many employers started offering
health insurance to their workers in lieu of
wage increases. (2) In 1948, the US Supreme
Court ruled that employee benefits, including health insurance, were a legitimate part
of union—management negotiations. Health
insurance then became a permanent part of
employee benefits in the postwar era (Health
Insurance Association of America 1991).
(3) In 1954, Congress amended the Internal Revenue Code to make employer-paid
health coverage nontaxable. In economic
value, employer-paid health insurance was
equivalent to getting additional salary without having to pay taxes on it, which provided
an incentive to obtain health insurance as an
employer—fumished benefit.
Employment-based health insurance
expanded rapidly. The economy was strong
during the postwar years of the 1950s, and
employers started offering more extensive
benefits. This led to the birth of“maj or medical” expense coverage to protect against
Medical Services in the Pestiadustrial Era 99
prolonged or catastrophic illness or injury
(Mayer and Mayer 1984). Thus, private
health insurance became the primary vehicle
for the delivery of health care services in the
United States.
Failure of National Health Care Initiatives
During the 19905
Starting with Germany in 1883, compulsory sickness insurance had spread throughout Europe by 1912. Health insurance in
European countries was viewed as a natural
outgrowth of insurance against industrial
accidents. Hence, it was considered logical
that Americans would also be willing to support a national health care program to protect
themselves from the high cost of sickness and
accidents occurring outside employment.
The American Association of Labor
Legislation (AALL) was founded in
1906. Its relatively small membership was
mainly academic—including some leading economists and social scientists-—and
some prominent labor leaders. Their allimportant agenda was to bring about social
reform through government action. The
AALL was primarily responsible for leading the successful drive for workers’ compensation. It then spearheaded the drive
for a government-run health insurance system for the general population (Anderson
1990) and supported the Progressive movement headed by former President Theodore
Roosevelt, who was again running for the
presidency in 1912 on a platform of social
reform. Roosevelt, who might have been a
national political sponsor for compulsory
health insurance, was defeated by Woodrow
Wilson, but the Progressive movement for
national health insurance did not die.
The AALL continued its efforts toward
a model for national health insurance by
Their apprehension was justified because
no actuarial information was available to
predict losses. But within a few years, lured
by the success ofthe Blue Cross plans, commercial insurance companies also started
offering health insurance.
Employment-Based Health Insurance
Between 1916 and 1918, 16 state legislatures, including New York and California,
attempted to enact legislation mandating
employers to provide health insurance,
but these efforts were unsuccessful (Davis
1996). Subsequently, three main developments pushed private health insurance to
become employment based in the United
States: (1) To control high inflation in
the economy during the World War 11
period, Congress imposed wage freezes. In
response, many employers started offering
health insurance to their workers in lieu of
wage increases. (2) In 1948, the US Supreme
Court ruled that employee benefits, including health insurance, were a legitimate part
of union—management negotiations. Health
insurance then became a permanent part of
employee benefits in the postwar era (Health
Insurance Association of America 1991).
(3) In 1954, Congress amended the Internal Revenue Code to make employer-paid
health coverage nontaxable. In economic
value, employer-paid health insurance was
equivalent to getting additional salary without having to pay taxes on it, which provided
an incentive to obtain health insurance as an
employer—fumished benefit.
Employment-based health insurance
expanded rapidly. The economy was strong
during the postwar years of the 1950s, and
employers started offering more extensive
benefits. This led to the birth of“maj or medical” expense coverage to protect against
Medical Services in the Pestiadustrial Era 99
prolonged or catastrophic illness or injury
(Mayer and Mayer 1984). Thus, private
health insurance became the primary vehicle
for the delivery of health care services in the
United States.
Failure of National Health Care Initiatives
During the 19905
Starting with Germany in 1883, compulsory sickness insurance had spread throughout Europe by 1912. Health insurance in
European countries was viewed as a natural
outgrowth of insurance against industrial
accidents. Hence, it was considered logical
that Americans would also be willing to support a national health care program to protect
themselves from the high cost of sickness and
accidents occurring outside employment.
The American Association of Labor
Legislation (AALL) was founded in
1906. Its relatively small membership was
mainly academic—including some leading economists and social scientists-—and
some prominent labor leaders. Their allimportant agenda was to bring about social
reform through government action. The
AALL was primarily responsible for leading the successful drive for workers’ compensation. It then spearheaded the drive
for a government-run health insurance system for the general population (Anderson
1990) and supported the Progressive movement headed by former President Theodore
Roosevelt, who was again running for the
presidency in 1912 on a platform of social
reform. Roosevelt, who might have been a
national political sponsor for compulsory
health insurance, was defeated by Woodrow
Wilson, but the Progressive movement for
national health insurance did not die.
The AALL continued its efforts toward
a model for national health insurance by
States United the in Services Health of Evolution The – 3 CHAPTER I00
con- economic and social both to appealing
national that argued reformers The cerns.
poverty relieve would insurance health
wage brought usually sickness because
individ- to costs medical high and loss
that argued also Reformers families. ual
contribute would insurance health national
illness, reducing by efficiency economic to
causes the diminishing and life, lengthening
Lead- 1982). (Starr discontent industrial of
showed time, the at AMA, the of ership
and plan, national a for support outward
united a formed AMA the and AALL the
health standard A legislation. secure to front
in states 15 in introduced was bill insurance
1971). (Stevens 1917
insur- health compulsory as long As
discussion, and study under only was ance
but, it; to heed no paid opponents potential
legisla- state into introduced were bills once
disap- vehement expressed opponents tures,
AMA’s the for support Eventually, proval.
cial. fi super only proved change social
pass to attempts repeated Historically,
the in legislation insurance health national
rea- several for failed have States United
four under classified be can which sons,
inexpediency, political categories: broad
dif- ideological dissimilarities, institutional
aversion. tax and ferences,
Inexpediency Politicol
health national their on embarking Before
Europe, Western in countries programs,
expe- were England, and Germany notably
politi- threatened that unrest labor riencing
as seen was insurance Social stability. cal
and loyalty workers’ obtain to means a
the in Conditions threats. political off ward
There different. quite were States United
stability. political to threat real no was
American the Europe, in countries Unlike
and decentralized highly was government
the of regulation direct little in engaged
Con- Although welfare. social or economy
compulsory of system a up set had gress
as seamen merchant for insurance hospital
mea- exceptional an was it 1798, as back far
welfare and health to related Matters sure.*
govem- local and state to left typically were
of levels these rule, general a as and ments,
pri- to possible as much as left government
action. voluntary and vate
I War World into America of entry The
the to blow political nal fi a provided 1917 in
anti-German as movement insurance health
government US The aroused. were feelings
and insurance, social German denounced
a it called insurance health of opponents
Ameri- with inconsistent menace, Prussian
1982). (Starr values can
compulsory pass to attempts After
lev- state the at failed laws insurance health
the 1920, by York, New and California in els
lost obviously an in interest lost itself AALL
of House AMA’s the 1920, in Also cause.
condemn- resolution a approved Delegates
would that insurance health compulsory ing
(Numbers government the by regulated be
was resolution this of aim main The 1985).
against profession medical the solidify to
of practice the with interference government
medicine.
Dissimilorities Institutional
Europe in institutions preexisting The
Germany dissimilar. were America and
to funds benefit mutual had England and
confronted often were Boston, as such seaports, *In1portant
from away were who seamen, injured and sick many with
requiring law a enacted Congress families. and homes their
each of wages the from withheld be month a cents 20 that
hos- marine merchant support to ships American on seaman
1994). Raffcl and {RaffeI pitals
States United the in Services Health of Evolution The – 3 CHAPTER I00
con- economic and social both to appealing
national that argued reformers The cerns.
poverty relieve would insurance health
wage brought usually sickness because
individ- to costs medical high and loss
that argued also Reformers families. ual
contribute would insurance health national
illness, reducing by efficiency economic to
causes the diminishing and life, lengthening
Lead- 1982). (Starr discontent industrial of
showed time, the at AMA, the of ership
and plan, national a for support outward
united a formed AMA the and AALL the
health standard A legislation. secure to front
in states 15 in introduced was bill insurance
1971). (Stevens 1917
insur- health compulsory as long As
discussion, and study under only was ance
but, it; to heed no paid opponents potential
legisla- state into introduced were bills once
disap- vehement expressed opponents tures,
AMA’s the for support Eventually, proval.
cial. fi super only proved change social
pass to attempts repeated Historically,
the in legislation insurance health national
rea- several for failed have States United
four under classified be can which sons,
inexpediency, political categories: broad
dif- ideological dissimilarities, institutional
aversion. tax and ferences,
Inexpediency Politicol
health national their on embarking Before
Europe, Western in countries programs,
expe- were England, and Germany notably
politi- threatened that unrest labor riencing
as seen was insurance Social stability. cal
and loyalty workers’ obtain to means a
the in Conditions threats. political off ward
There different. quite were States United
stability. political to threat real no was
American the Europe, in countries Unlike
and decentralized highly was government
the of regulation direct little in engaged
Con- Although welfare. social or economy
compulsory of system a up set had gress
as seamen merchant for insurance hospital
mea- exceptional an was it 1798, as back far
welfare and health to related Matters sure.*
govem- local and state to left typically were
of levels these rule, general a as and ments,
pri- to possible as much as left government
action. voluntary and vate
I War World into America of entry The
the to blow political nal fi a provided 1917 in
anti-German as movement insurance health
government US The aroused. were feelings
and insurance, social German denounced
a it called insurance health of opponents
Ameri- with inconsistent menace, Prussian
1982). (Starr values can
compulsory pass to attempts After
lev- state the at failed laws insurance health
the 1920, by York, New and California in els
lost obviously an in interest lost itself AALL
of House AMA’s the 1920, in Also cause.
condemn- resolution a approved Delegates
would that insurance health compulsory ing
(Numbers government the by regulated be
was resolution this of aim main The 1985).
against profession medical the solidify to
of practice the with interference government
medicine.
Dissimilorities Institutional
Europe in institutions preexisting The
Germany dissimilar. were America and
to funds benefit mutual had England and
confronted often were Boston, as such seaports, *In1portant
from away were who seamen, injured and sick many with
requiring law a enacted Congress families. and homes their
each of wages the from withheld be month a cents 20 that
hos- marine merchant support to ships American on seaman
1994). Raffcl and {RaffeI pitals
provide sickness benefits. These benefits
reflected an awareness ofthe value ofinsuring against the cost of sickness among a
sector ofthe working population. Voluntary
sickness funds were less developed in the
United States than in Europe, reflecting less
interest in health insurance and less familiarity with it. More important, American
hospitals were mainly private, whereas in
Europe they were largely government operated (Starr 1982).
Dominance of private institutions of
health care delivery was seen to be inconsistent with national financing and payment
mechanisms. For instance, compulsory
health insurance proposals of the AALL
were regarded by individual members ofthe
medical profession as a threat to their private
practice because such proposals would shift
the primary source of income of medical
professionals from individual patients to the
government (Anderson 1990). Any efforts
that would potentially erode the fee-forservice payment system and let private practice of medicine be controlled by a powerful
third party-wparticularly the governmentwere opposed.
Other institutional entities were also
opposed to govemment-sponsored universal coverage. The insurance industry feared
losing the income it derived from disability
insurance, some insurance against medical
services, and funeral benefits* (Anderson
1990). The pharmaceutical industry feared
the government as a monopoly buyer,
and retail pharmacists feared that hospitals would establish their own pharmacies
under a government—run national health
*Patients adtnitted to a hospital were required to pay a
burial deposit so the hospital would not have to incur a
burial expense if they died (Raffel and Raffel I994}. Therefore, many people bought fiitteral policies from insurance
companies.
Medical Services in the Pestindustriel Ere till
care program (Anderson 1990). Employers also saw the proposals as contrary to
their interests. Spokespersons for American
business rejected the argument that national
health insurance would add to productivity
and efficiency. It may seem ironic, but the
labor unions—the American Federation of
Labor in particular—also denounced compulsory health insurance at the time. Union
leaders were afraid they would transfer over
to the government their own legitimate role
of providing social benefits, thus weakening the unions’ influence in the workplace.
Organized labor was the largest and most
powerful interest group at that time, and its
lack of support is considered instrumental
in the defeat of national health insurance
(Anderson 1990).
Ideological Dillerences
The American value system has been based
largely on the principles of market justice
(discussed in Chapter 2). individualism and
self-determination, distrust of government,
and reliance on the private sector to address
social concerns as typical American values
have stood as a bulwark against anything
perceived as an onslaught on individual
liberties. The beliefs and values have represented the sentiments ofthe American middle class, whose support was necessary for
any broad-based health care reform. Conversely, during times of national distress,
such as the Great Depression, pure necessity may have legitimized the advancement
of social programs, such as the New Deal
programs ofthe Franklin Roosevelt era (for
example, Social Security legislation providing old—age pensions and unemployment
compensation).
In the early 1940s, during Roosevelt’s
presidency, several bills on national health
provide sickness benefits. These benefits
reflected an awareness ofthe value ofinsuring against the cost of sickness among a
sector ofthe working population. Voluntary
sickness funds were less developed in the
United States than in Europe, reflecting less
interest in health insurance and less familiarity with it. More important, American
hospitals were mainly private, whereas in
Europe they were largely government operated (Starr 1982).
Dominance of private institutions of
health care delivery was seen to be inconsistent with national financing and payment
mechanisms. For instance, compulsory
health insurance proposals of the AALL
were regarded by individual members ofthe
medical profession as a threat to their private
practice because such proposals would shift
the primary source of income of medical
professionals from individual patients to the
government (Anderson 1990). Any efforts
that would potentially erode the fee-forservice payment system and let private practice of medicine be controlled by a powerful
third party-wparticularly the governmentwere opposed.
Other institutional entities were also
opposed to govemment-sponsored universal coverage. The insurance industry feared
losing the income it derived from disability
insurance, some insurance against medical
services, and funeral benefits* (Anderson
1990). The pharmaceutical industry feared
the government as a monopoly buyer,
and retail pharmacists feared that hospitals would establish their own pharmacies
under a government—run national health
*Patients adtnitted to a hospital were required to pay a
burial deposit so the hospital would not have to incur a
burial expense if they died (Raffel and Raffel I994}. Therefore, many people bought fiitteral policies from insurance
companies.
Medical Services in the Pestindustriel Ere till
care program (Anderson 1990). Employers also saw the proposals as contrary to
their interests. Spokespersons for American
business rejected the argument that national
health insurance would add to productivity
and efficiency. It may seem ironic, but the
labor unions—the American Federation of
Labor in particular—also denounced compulsory health insurance at the time. Union
leaders were afraid they would transfer over
to the government their own legitimate role
of providing social benefits, thus weakening the unions’ influence in the workplace.
Organized labor was the largest and most
powerful interest group at that time, and its
lack of support is considered instrumental
in the defeat of national health insurance
(Anderson 1990).
Ideological Dillerences
The American value system has been based
largely on the principles of market justice
(discussed in Chapter 2). individualism and
self-determination, distrust of government,
and reliance on the private sector to address
social concerns as typical American values
have stood as a bulwark against anything
perceived as an onslaught on individual
liberties. The beliefs and values have represented the sentiments ofthe American middle class, whose support was necessary for
any broad-based health care reform. Conversely, during times of national distress,
such as the Great Depression, pure necessity may have legitimized the advancement
of social programs, such as the New Deal
programs ofthe Franklin Roosevelt era (for
example, Social Security legislation providing old—age pensions and unemployment
compensation).
In the early 1940s, during Roosevelt’s
presidency, several bills on national health
States United the in Services Health of Evolution The – 3 CHAPTER 102
but Congress, in introduced were insurance
most the Perhaps pass. to failed all they
Wagner—Murray- the was bill notable
named and 1943 in drafted bill, Dingell
sponsors. congressional bill’s the after
diverted 11 War World time, this However,
and issues, other to attention nation’s the
the support active president’s the without
1985). (Numbers quietly died bill
rst fi the became Truman Harry 1946, In
national a for appeal an make to president
1990). (Anderson program care health
a proposed had who Progressives, the Unlike
proposed Truman class, working the for plan
would that plan insurance health single a
presi- the At society. of classes all include
Wagner-Murray—Dingell the behest, dent’s
The reintroduced. and redrafted was bill
plan. the opposing in vehement was AMA
AHA, the as such groups, interest Other
health private time, this By it. opposed also
reac- public Initial expanded. had insurance
was bill Wagner-Murray-Dingell the to tion
government—- a when however, positive;
pri- to compared was plan medical controlled
of 12% only that showed polls insurance, vate
Security Social extending favored public the
1985). (Numbers insurance health include to
any War,* Cold the of era this During
insur- health national introduce to attempts
of label stigmatizing the with met were ance
since has that label a rrrrtr/ft’.t’ne, .s’r:t’t’rrh’::etl
large-scale any with synonymous become
health of expansion government-sponsored
practice private the in intrusion or insurance
control took Republicans The medicine. of
in interest any and 1946, in Congress of
put was insurance health national enacting
many,
of surprise the to However, rest. to
promising 1948, in reelected was Truman
the between 1! War World after hostility and “‘Rivalry
Union. Soviet then the and States United
Democrats the if insurance health national
1982). (Starr power to returned be would
a levied AMA the inevitable, the Fearing
a toward members its of each on fee $25
1990), (Anderson million $3.5 of chest war
at money of sum substantial a was which
rela- public the hired AMA The time. the
spent and Baxter and Whitaker of rmfi tions
one launch to alone, 1949 in million, $1.5
in efforts lobbying expensive most the of
directly campaign The history. American
Com- with insurance health national linked
medi- socialized of idea the until munism
public’s the in implanted rmly fi was cine
com- few a proposed Republicans minds.
Democrats the neither which in promises
the 1952, By interested. were AMA the nor
Dwight president, Republican a of election
further any ended effectively Eisenhower,
insurance. health national over debate
Aversion Tox
for pay to taxes increased to aversion An
middle- reason another is programs social
insured, already are who Americans, class
expand to initiatives national opposed have
to According coverage. insurance health
sup- to found been have Americans polls,
to ought government the that idea the port
to need nancial fi in are who people help
most However, care. medical their for pay
in increase an favored not have Americans
This care. such for pay to taxes own their
in failed reform care health why perhaps is
1993.
1991, in presidency the seeking While
system health made Clinton Bill Governor
since Not issue. campaign major a reform
1940s the in initiatives Truman”s Harry
a by made been attempt bold a such had
Pennsylva- the In candidate. presidential
1991, November in election Senate US nia
States United the in Services Health of Evolution The – 3 CHAPTER 102
but Congress, in introduced were insurance
most the Perhaps pass. to failed all they
Wagner—Murray- the was bill notable
named and 1943 in drafted bill, Dingell
sponsors. congressional bill’s the after
diverted 11 War World time, this However,
and issues, other to attention nation’s the
the support active president’s the without
1985). (Numbers quietly died bill
rst fi the became Truman Harry 1946, In
national a for appeal an make to president
1990). (Anderson program care health
a proposed had who Progressives, the Unlike
proposed Truman class, working the for plan
would that plan insurance health single a
presi- the At society. of classes all include
Wagner-Murray—Dingell the behest, dent’s
The reintroduced. and redrafted was bill
plan. the opposing in vehement was AMA
AHA, the as such groups, interest Other
health private time, this By it. opposed also
reac- public Initial expanded. had insurance
was bill Wagner-Murray-Dingell the to tion
government—- a when however, positive;
pri- to compared was plan medical controlled
of 12% only that showed polls insurance, vate
Security Social extending favored public the
1985). (Numbers insurance health include to
any War,* Cold the of era this During
insur- health national introduce to attempts
of label stigmatizing the with met were ance
since has that label a rrrrtr/ft’.t’ne, .s’r:t’t’rrh’::etl
large-scale any with synonymous become
health of expansion government-sponsored
practice private the in intrusion or insurance
control took Republicans The medicine. of
in interest any and 1946, in Congress of
put was insurance health national enacting
many,
of surprise the to However, rest. to
promising 1948, in reelected was Truman
the between 1! War World after hostility and “‘Rivalry
Union. Soviet then the and States United
Democrats the if insurance health national
1982). (Starr power to returned be would
a levied AMA the inevitable, the Fearing
a toward members its of each on fee $25
1990), (Anderson million $3.5 of chest war
at money of sum substantial a was which
rela- public the hired AMA The time. the
spent and Baxter and Whitaker of rmfi tions
one launch to alone, 1949 in million, $1.5
in efforts lobbying expensive most the of
directly campaign The history. American
Com- with insurance health national linked
medi- socialized of idea the until munism
public’s the in implanted rmly fi was cine
com- few a proposed Republicans minds.
Democrats the neither which in promises
the 1952, By interested. were AMA the nor
Dwight president, Republican a of election
further any ended effectively Eisenhower,
insurance. health national over debate
Aversion Tox
for pay to taxes increased to aversion An
middle- reason another is programs social
insured, already are who Americans, class
expand to initiatives national opposed have
to According coverage. insurance health
sup- to found been have Americans polls,
to ought government the that idea the port
to need nancial fi in are who people help
most However, care. medical their for pay
in increase an favored not have Americans
This care. such for pay to taxes own their
in failed reform care health why perhaps is
1993.
1991, in presidency the seeking While
system health made Clinton Bill Governor
since Not issue. campaign major a reform
1940s the in initiatives Truman”s Harry
a by made been attempt bold a such had
Pennsylva- the In candidate. presidential
1991, November in election Senate US nia
the victory of Democrat Harris Wofford
over Republican Richard Thornburgh sent
a clear signal that the time for a national
health care program might be ripe. Wofford’s call for national health insurance was
widely supported by middle—class Pennsylvanians. Election results in other states were
not quite as decisive on the health reform
issue, but various public polls seemed to
suggest that the rising cost of health care
was a concern for many people. Against
this backdrop, both Bill Clinton and the running incumbent, President George (Herbert
Walker) Bush, advanced health care reform
proposals.
After taking office in 1992, President
Clinton made health system reform a top
priority. Policy experts and public opinion leaders have debated over what went
wrong. Some of the fundamental causes
for the failure of the Clinton plan were no
doubt historical in nature, as discussed previously in this chapter. One seasoned political observer, James J. Mongan, however,
remarked that reform debates in Congress
were not about the expansion of health care
services but rather were about the financing of the proposed services. Apparently,
avoiding tax increases took priority over
expanding health insurance coverage and
caused the demise of Clinton’s health care
reform initiatives (Mongan 1995).
Creation of Medicare and Medicaid
The year 1965 marks a major turning point
in US health policy. Up to this point, private health insurance was the only widely
available source of payment for health care,
and it was available primarily to middleclass working Americans and their families.
Many of the elderly, the unemployed, and
the poor had to rely on their own resources,
Medical Services in the Postindastrr’al Era 103
on limited public programs, or on charity
from hospitals and individual physicians.
Often, when charity care was provided,
private payers were charged more to make
up the difference, a practice referred to as
ct.-.s’r-s‘lrr_ifi‘.irt_.t,r or cross-.srrbsirlfzarfrirr. in
1965, Congress passed the amendments
to the Social Security Act and created the
Medicare and Medicaid programs. Thus,
for the first time in US history, the govem—
ment assumed direct responsibility to pay
for some ofthe health care on behalf oftwo
vulnerable population groups—the elderly
and the poor (Potter and Longest 1994).
Through the debates over how to protect
the public from rising costs of health care
and the opposition to national health insurance, one thing had become clear: Government intervention was not desired insofar as
it pertained to how most Americans received
health care, with one exception. Less opposition would be encountered if reform
initiatives were proposed for the underprivileged and vulnerable classes. In principle,
the poor were considered a special class
who could be served through a governmentsponsored program. The elderly—those 65
years of age and over—were another group
who started to receive increased attention in
the 1950s. On their own, most of the poor
and the elderly could not afford the increasing costs of health care. Also, because the
health status ofthese population groups was
significantly worse than that of the general
population, they required a higher level of
health care services. The elderly, particularly, had higher incidence and prevalence
of disease compared to younger groups.
It was also estimated that less than onehalf of the elderly population was covered
by private health insurance. By this time,
the growing elderly middle class was also
becoming a politically active force.
the victory of Democrat Harris Wofford
over Republican Richard Thornburgh sent
a clear signal that the time for a national
health care program might be ripe. Wofford’s call for national health insurance was
widely supported by middle—class Pennsylvanians. Election results in other states were
not quite as decisive on the health reform
issue, but various public polls seemed to
suggest that the rising cost of health care
was a concern for many people. Against
this backdrop, both Bill Clinton and the running incumbent, President George (Herbert
Walker) Bush, advanced health care reform
proposals.
After taking office in 1992, President
Clinton made health system reform a top
priority. Policy experts and public opinion leaders have debated over what went
wrong. Some of the fundamental causes
for the failure of the Clinton plan were no
doubt historical in nature, as discussed previously in this chapter. One seasoned political observer, James J. Mongan, however,
remarked that reform debates in Congress
were not about the expansion of health care
services but rather were about the financing of the proposed services. Apparently,
avoiding tax increases took priority over
expanding health insurance coverage and
caused the demise of Clinton’s health care
reform initiatives (Mongan 1995).
Creation of Medicare and Medicaid
The year 1965 marks a major turning point
in US health policy. Up to this point, private health insurance was the only widely
available source of payment for health care,
and it was available primarily to middleclass working Americans and their families.
Many of the elderly, the unemployed, and
the poor had to rely on their own resources,
Medical Services in the Postindastrr’al Era 103
on limited public programs, or on charity
from hospitals and individual physicians.
Often, when charity care was provided,
private payers were charged more to make
up the difference, a practice referred to as
ct.-.s’r-s‘lrr_ifi‘.irt_.t,r or cross-.srrbsirlfzarfrirr. in
1965, Congress passed the amendments
to the Social Security Act and created the
Medicare and Medicaid programs. Thus,
for the first time in US history, the govem—
ment assumed direct responsibility to pay
for some ofthe health care on behalf oftwo
vulnerable population groups—the elderly
and the poor (Potter and Longest 1994).
Through the debates over how to protect
the public from rising costs of health care
and the opposition to national health insurance, one thing had become clear: Government intervention was not desired insofar as
it pertained to how most Americans received
health care, with one exception. Less opposition would be encountered if reform
initiatives were proposed for the underprivileged and vulnerable classes. In principle,
the poor were considered a special class
who could be served through a governmentsponsored program. The elderly—those 65
years of age and over—were another group
who started to receive increased attention in
the 1950s. On their own, most of the poor
and the elderly could not afford the increasing costs of health care. Also, because the
health status ofthese population groups was
significantly worse than that of the general
population, they required a higher level of
health care services. The elderly, particularly, had higher incidence and prevalence
of disease compared to younger groups.
It was also estimated that less than onehalf of the elderly population was covered
by private health insurance. By this time,
the growing elderly middle class was also
becoming a politically active force.
States United the in Services Health of Evolution The – 3 CHAPTER 104
poor the for assistance Government
became it once sought was elderly the and
ensure not would alone market the that clear
population vulnerable these for access
by Congress in introduced bill A groups.
momentum provided 1957 in Forand Aime
nursing and hospital necessary including for
Secu- Social of extension an as care home
1971). (Stevens elderly the for ts fi bene rity
massive a undertook however, AMA, The
insur- government a portray to campaign
physicianepatient the to threat a as plan ance
public but stalled, was bill The relationship.
were which country, the around hearings
intense an produced elderly, the by packed
onto issue the push to support grassroots
com- A 1982). (Starr agenda national the
Assis- Medical the legislation, promised
known also 86-778), Law (Public Act tance
in effect into went Act, Kerr-Mills the as
were grants federal Act, the Under 1960.
services health extend to states the to given
to programs welfare state the by provided
previously who elderly low-income those
the Since 1990). (Anderson qualify not did
that res‘! inuuns a on based was program
pre- a below people to eligibility ned fi con
opposed was it level, income determined
as representatives congressional liberal by
(Starr elderly the to humiliation of source a
was program the years, 3 Within 1982).
states many because ineffective declared
1971). (Stevens it implement even not did
and aged the for insurance health 1964, In
President of priorities top became poor the
programs. Society Great Johnson’s
the Medicare, over debate the During
pro- “Eldercare“ own its developed AMA
federal—state a for called which posal, propolicies insurance private subsidize to gram
Rep- services. physician and hospital for
yet introduced Byrnes W. John resentative
“Bettercare.” dubbed proposal, another
par- on based program federal a proposed It
elderly, the by contributions premium tial
gov- the by subsidized remainder the with
cred- tax included proposals Other ernment.
insurance health for deductions tax and its
premiums.
program three-layered a end, the In
constituted layers two rst fi The emerged.
Tithe or .-1»-1edric’rrre, of B Part and A Part
Amendment Security Social the of XI’!!!
health nanced fi publicly provide to 1965 of
Forand’s on Based elderly. the to insurance
to proposal administration’s the bill, initial
nurs- partial and insurance hospital nance fi
through elderly the for coverage home ing
Medicare. of A Part became Security Social
physicians’ cover to proposal Byrnes The
insur- government-subsidized through bills
exten- An Medicare. of B Part became ance
federal of program Kerr-Mills the of sion
each on based states, the to funds matching
Mei:!.r’cnr’rI, became needs, financial state’s
Amend- Security Social the of XIX Title or
was program Medicaid The 1965. of ment
estab- tests means on based indigent, the for
expanded was it but state, each by lished
poor the just not groups, age all include to
1971). (Stevens elderly
Medicare together, adopted Although
different sharply reflected Medicaid and
broad by upheld was Medicare traditions.
to attached being and, support grassroots
distinction. class no had Security, Social
the by burdened was however, Medicaid,
uni- had Medicare welfare. ofpublic stigma
and eligibility for standards national form
state to state from varied Medicaid ts; fi bene
Medi- ts. fi bene and eligibility of terms in
that bill, brrtcrrtcue to physicians allowed care
the above amount the patient the charge is,
differ- the recoup and fees set program’s
billing balance prohibited Medicaid ence.
participation limited had consequently, and,
States United the in Services Health of Evolution The – 3 CHAPTER 104
poor the for assistance Government
became it once sought was elderly the and
ensure not would alone market the that clear
population vulnerable these for access
by Congress in introduced bill A groups.
momentum provided 1957 in Forand Aime
nursing and hospital necessary including for
Secu- Social of extension an as care home
1971). (Stevens elderly the for ts fi bene rity
massive a undertook however, AMA, The
insur- government a portray to campaign
physicianepatient the to threat a as plan ance
public but stalled, was bill The relationship.
were which country, the around hearings
intense an produced elderly, the by packed
onto issue the push to support grassroots
com- A 1982). (Starr agenda national the
Assis- Medical the legislation, promised
known also 86-778), Law (Public Act tance
in effect into went Act, Kerr-Mills the as
were grants federal Act, the Under 1960.
services health extend to states the to given
to programs welfare state the by provided
previously who elderly low-income those
the Since 1990). (Anderson qualify not did
that res‘! inuuns a on based was program
pre- a below people to eligibility ned fi con
opposed was it level, income determined
as representatives congressional liberal by
(Starr elderly the to humiliation of source a
was program the years, 3 Within 1982).
states many because ineffective declared
1971). (Stevens it implement even not did
and aged the for insurance health 1964, In
President of priorities top became poor the
programs. Society Great Johnson’s
the Medicare, over debate the During
pro- “Eldercare“ own its developed AMA
federal—state a for called which posal, propolicies insurance private subsidize to gram
Rep- services. physician and hospital for
yet introduced Byrnes W. John resentative
“Bettercare.” dubbed proposal, another
par- on based program federal a proposed It
elderly, the by contributions premium tial
gov- the by subsidized remainder the with
cred- tax included proposals Other ernment.
insurance health for deductions tax and its
premiums.
program three-layered a end, the In
constituted layers two rst fi The emerged.
Tithe or .-1»-1edric’rrre, of B Part and A Part
Amendment Security Social the of XI’!!!
health nanced fi publicly provide to 1965 of
Forand’s on Based elderly. the to insurance
to proposal administration’s the bill, initial
nurs- partial and insurance hospital nance fi
through elderly the for coverage home ing
Medicare. of A Part became Security Social
physicians’ cover to proposal Byrnes The
insur- government-subsidized through bills
exten- An Medicare. of B Part became ance
federal of program Kerr-Mills the of sion
each on based states, the to funds matching
Mei:!.r’cnr’rI, became needs, financial state’s
Amend- Security Social the of XIX Title or
was program Medicaid The 1965. of ment
estab- tests means on based indigent, the for
expanded was it but state, each by lished
poor the just not groups, age all include to
1971). (Stevens elderly
Medicare together, adopted Although
different sharply reflected Medicaid and
broad by upheld was Medicare traditions.
to attached being and, support grassroots
distinction. class no had Security, Social
the by burdened was however, Medicaid,
uni- had Medicare welfare. ofpublic stigma
and eligibility for standards national form
state to state from varied Medicaid ts; fi bene
Medi- ts. fi bene and eligibility of terms in
that bill, brrtcrrtcue to physicians allowed care
the above amount the patient the charge is,
differ- the recoup and fees set program’s
billing balance prohibited Medicaid ence.
participation limited had consequently, and,
from physicians (Starr 1982). Medicaid, in
essence, has created a two-tier system of
medical care delivery because, even today,
many physicians refuse to accept Medicaid patients due to low fees set by the
government.
Not long after Medicare and Medicaid
were in operation, national spending for
health services began to rise, as did public
outlays offunds in relation to private spending for health services (Anderson 1990).
For example, national health expenditures
(NHE), which had increased by 50% from
1955 to 1960, and again from 1960 to 1965,
jumped by 78% from 1965 to 1970, and by
71% from 1970 to 1975. Similarly, public
expenditures for health care, which were
stable at 25% of NHE for 1955, 1960, and
1965, increased to 36.5% of NHE in 1970,
and to 42.1% of NHE in 1975 (based on
data from Bureau ofthe Census 1976).
Regulatory Role of Public Health Agencies
With the expansion of publicly financed
Medicare and Medicaid programs, the regulatory powers of government have increasingly encroached upon the private sector.
This is because the government provides
financing for the two programs, but services
are delivered by the private sector. After the
federal government developed the standards
for participation in the Medicare program,
states developed regulations in conjunction
with the Medicaid program. The regulations often overlapped, and the federal government delegated authority to the states to
carry out the monitoring ofregulatory compliance. As a result, the regulatory powers
assigned to state public health agencies
increased dramatically. Thus, most institutions of health care delivery are subject to
annual scrutiny by public health agencies
Medical Services in the Pastindustrial Era 105
under the authority delegated to them by the
federal and state governments.
Prototypes of Managed Care
Even though the early practice ofmedicine in
the United States was mainly characterized
by private solo practice, three subsequent
developments in medical care delivery are
noteworthy: contract practice, group practice, and prepaid group practice. All three
required some sort of organizational integration, which was a departure from solo
practice. These innovative arrangements
can also be regarded as early precursors of
managed care and integrated organizations
which, a few decades later, paved the way
for the corporate era in medical care.
Contrcrct Practice
In 1882, Northern Pacific Railroad Beneficial Association was one of the first
employers to provide direct medical care
(Davis 1996). Between 1850 and 1900,
other railroad, mining, and lumber enterprises developed extensive employee medical services. Such companies conducted
operations in isolated areas where physicians were unavailable. lnducements, such
as a guaranteed salary, were commonly
offered to attract physicians. Another common arrangement was to contract with independent physicians and hospitals at a flat
fee per worker per month, referred to as
cajiirrrririrr. The AMA recognized the necessity of contract practice in remote areas, but
elsewhere contract practice was regarded
as a form of exploitation because it was
assumed that physicians would bid against
each other and drive down the price. Offering services at reduced rates was regarded
by the AMA as an unethical invasion of
from physicians (Starr 1982). Medicaid, in
essence, has created a two-tier system of
medical care delivery because, even today,
many physicians refuse to accept Medicaid patients due to low fees set by the
government.
Not long after Medicare and Medicaid
were in operation, national spending for
health services began to rise, as did public
outlays offunds in relation to private spending for health services (Anderson 1990).
For example, national health expenditures
(NHE), which had increased by 50% from
1955 to 1960, and again from 1960 to 1965,
jumped by 78% from 1965 to 1970, and by
71% from 1970 to 1975. Similarly, public
expenditures for health care, which were
stable at 25% of NHE for 1955, 1960, and
1965, increased to 36.5% of NHE in 1970,
and to 42.1% of NHE in 1975 (based on
data from Bureau ofthe Census 1976).
Regulatory Role of Public Health Agencies
With the expansion of publicly financed
Medicare and Medicaid programs, the regulatory powers of government have increasingly encroached upon the private sector.
This is because the government provides
financing for the two programs, but services
are delivered by the private sector. After the
federal government developed the standards
for participation in the Medicare program,
states developed regulations in conjunction
with the Medicaid program. The regulations often overlapped, and the federal government delegated authority to the states to
carry out the monitoring ofregulatory compliance. As a result, the regulatory powers
assigned to state public health agencies
increased dramatically. Thus, most institutions of health care delivery are subject to
annual scrutiny by public health agencies
Medical Services in the Pastindustrial Era 105
under the authority delegated to them by the
federal and state governments.
Prototypes of Managed Care
Even though the early practice ofmedicine in
the United States was mainly characterized
by private solo practice, three subsequent
developments in medical care delivery are
noteworthy: contract practice, group practice, and prepaid group practice. All three
required some sort of organizational integration, which was a departure from solo
practice. These innovative arrangements
can also be regarded as early precursors of
managed care and integrated organizations
which, a few decades later, paved the way
for the corporate era in medical care.
Contrcrct Practice
In 1882, Northern Pacific Railroad Beneficial Association was one of the first
employers to provide direct medical care
(Davis 1996). Between 1850 and 1900,
other railroad, mining, and lumber enterprises developed extensive employee medical services. Such companies conducted
operations in isolated areas where physicians were unavailable. lnducements, such
as a guaranteed salary, were commonly
offered to attract physicians. Another common arrangement was to contract with independent physicians and hospitals at a flat
fee per worker per month, referred to as
cajiirrrririrr. The AMA recognized the necessity of contract practice in remote areas, but
elsewhere contract practice was regarded
as a form of exploitation because it was
assumed that physicians would bid against
each other and drive down the price. Offering services at reduced rates was regarded
by the AMA as an unethical invasion of
States United the in Services Health of Evolution The * 3 CHAPTER 106
employer-based When practice. private
the in common became insurance health
freed was profession medical the 1940s,
large by control direct of threat the from
enabled also insurance Health corporations.
of hospitals and physicians to go to workers
1982). (Starr choice their
medicine—that of practice Corporate
tfi for-pro by care medical of delivery is,
by prohibited generally corporations—was
in commercialism as labeled was It law.
passed Oregon however, 1917, In medicine.
per- which Act, Association Hospital the
provide to corporations tfi for-pro mitted
insurance health Whereas services. medical
pay- and insurers as functioning companies,
patients between intermediaries as acted ers,
in associations hospital the physicians, and
physicians with directly contracted Oregon
Uti- them. over control some exercised and
second requiring by managed was lization
review- by and surgery major for opinions
corpora- The stays. hospital of length ing
refusing fees, medical restricted also tions
short, In excessive. deemed prices pay to
the in power countervailing a as acted they
profes- physicians’ limit to market medical
physicians though Even autonomy. sional
busi- do to continued they controls, resented
return in associations hospital the with ness
1982). (Starr payments guaranteed for
MCOs 1990s, and 1980s the in Later,
pro- with arrangements contractual used
the replacing in successful were and viders
payment fee-for-service traditional arrangefees. discounted and capitation by ments
utilization excessive control to Mechanisms
care. managed of feature key another are
Practice Group
form another represented medicine Group
care. medical for organization corporate of
relationship the changed practice Group
together them bringing by physicians among
assis- technical and managers business with
labor of division elaborate more a in tants
in started Clinic, Mayo The 1982). (Starr
regarded is 1887, in Minnesota, Rochester,
spe- of consolidation the of prototype a as
of concept The practice. group into cialists
threat a presented group multispecialty a
It practice. general of continuation the to
specialists to competition presented also
the Hence, practice. solo in remained who
with met practice group of development
(Stevens resistance professional widespread
and expenses of sharing however, 1971),
advantages economic other and incomes
grow. to practices group caused
Plans Group Prepaid
practice group of ciencies fi ef the time, In
plans, group prepaid of formation the to led
received population enrolled an which in
fee. capitated a for services comprehensive
became rst fi plans practice group Prepaid
the in markets urban large some in popular
Asso- Medical American The States. United
the plan, rst fi the opposed (AMA) ciation
Washington of Association Health Group
but DC), Washington, in 1937 in (started
of restraint of guilty found was AMA the
Act. Antitrust Sherman the violating trade,
pav- in crucial been have may verdict This
prepaid other of growth the for way the ing
plans. practice group
York, New of Plan Health HIP The
most the of one as stands 1947, in started
compre- providing programs, successful
organized through services medical hensive
and physicians family of groups medical
Kaiser- Similarly, 1980). (Raffel specialists
on grown has 1942, in started Permanente,
the are examples Other Coast. West the
States United the in Services Health of Evolution The * 3 CHAPTER 106
employer-based When practice. private
the in common became insurance health
freed was profession medical the 1940s,
large by control direct of threat the from
enabled also insurance Health corporations.
of hospitals and physicians to go to workers
1982). (Starr choice their
medicine—that of practice Corporate
tfi for-pro by care medical of delivery is,
by prohibited generally corporations—was
in commercialism as labeled was It law.
passed Oregon however, 1917, In medicine.
per- which Act, Association Hospital the
provide to corporations tfi for-pro mitted
insurance health Whereas services. medical
pay- and insurers as functioning companies,
patients between intermediaries as acted ers,
in associations hospital the physicians, and
physicians with directly contracted Oregon
Uti- them. over control some exercised and
second requiring by managed was lization
review- by and surgery major for opinions
corpora- The stays. hospital of length ing
refusing fees, medical restricted also tions
short, In excessive. deemed prices pay to
the in power countervailing a as acted they
profes- physicians’ limit to market medical
physicians though Even autonomy. sional
busi- do to continued they controls, resented
return in associations hospital the with ness
1982). (Starr payments guaranteed for
MCOs 1990s, and 1980s the in Later,
pro- with arrangements contractual used
the replacing in successful were and viders
payment fee-for-service traditional arrangefees. discounted and capitation by ments
utilization excessive control to Mechanisms
care. managed of feature key another are
Practice Group
form another represented medicine Group
care. medical for organization corporate of
relationship the changed practice Group
together them bringing by physicians among
assis- technical and managers business with
labor of division elaborate more a in tants
in started Clinic, Mayo The 1982). (Starr
regarded is 1887, in Minnesota, Rochester,
spe- of consolidation the of prototype a as
of concept The practice. group into cialists
threat a presented group multispecialty a
It practice. general of continuation the to
specialists to competition presented also
the Hence, practice. solo in remained who
with met practice group of development
(Stevens resistance professional widespread
and expenses of sharing however, 1971),
advantages economic other and incomes
grow. to practices group caused
Plans Group Prepaid
practice group of ciencies fi ef the time, In
plans, group prepaid of formation the to led
received population enrolled an which in
fee. capitated a for services comprehensive
became rst fi plans practice group Prepaid
the in markets urban large some in popular
Asso- Medical American The States. United
the plan, rst fi the opposed (AMA) ciation
Washington of Association Health Group
but DC), Washington, in 1937 in (started
of restraint of guilty found was AMA the
Act. Antitrust Sherman the violating trade,
pav- in crucial been have may verdict This
prepaid other of growth the for way the ing
plans. practice group
York, New of Plan Health HIP The
most the of one as stands 1947, in started
compre- providing programs, successful
organized through services medical hensive
and physicians family of groups medical
Kaiser- Similarly, 1980). (Raffel specialists
on grown has 1942, in started Permanente,
the are examples Other Coast. West the
Group Health Cooperative of Puget Sound
in Seattle, operating since 1947, which is
a consumer—owned cooperative prepaid
group practice (Williams 1993), and the
Labor Health Institute in St. Louis, started
in 1945, which is a union-sponsored group
practice scheme (Stevens 1971).
The idea of prepaid group practice had
limitations. It required the sponsorship of
large organizations. HIP, for example, was
created by New York’s Mayor Fiorello La
Guardia for city employees. lndustrialist
Henry Kaiser initially set up his prepaid
plan to provide comprehensive health care
services to his own workers, but the health
plan was later extended to other employers.
The HMO Act of 1973
Health care expenditures in the United
States started to explode after the creation
of Medicare and Medicaid, which enrolled
over 35 million people who then had access
to health care services financed by the
government. The HMO Act of 1973 was
passed during the Nixon Administration,
with the objective of stimulating growth of
HMOs by providing federal funds for the
establishment and expansion of new HMOs
(Wilson and Neuhauser 1985). The underlying reason for supporting the growth of
HMOs was the belief that prepaid medical
care, as an alternative to traditional fee-forservice practice, would stimulate competition among health plans, enhance efficiency,
and slow the rate of increase in health care
expenditures. The HMO Act required
employers with 25 or more employees to
offer an HMO alternative if one was available in their geographic area. The objective was to create 1,700 HMOs to enroll
40 million members by 1976 (Iglehart 1994).
However, the HMO Act failed to achieve
Medical Care in the Cerporate Era 107
this objective. By 1976, only 174 HMOs had
formed, with an enrollment of 6 million (Public Health Service 1995). Employers did not
take the HMO option seriously and continued
to offer traditional fee-for-service insurance
until their own health insurance expenses
started to grow rapidly during the 1980s.
Medical Care in the Corporate Era
The latter part of the 20th century and
dawning of the 21st century were marked
by the growth and consolidation of large
business corporations and tremendous
advances in global communications, transportation, and trade. These developments
have been changing the way health care is
delivered in the United States and, indeed,
around the world. The rise of multinational
corporations, the information revolution,
and globalization have been interdependent phenomena. The World Trade Organization’s General Agreement on Trade in
Services (GATS), which became effective
in 1995, aims to gradually remove all barriers to international trade in various services.
In health care services, GATS may regulate
health insurance, hospital services, telemedicine, and acquisition of medical treatment abroad. GATS negotiations, however,
have faced controversy as various countries
fear that it may interfere with their domestic
health care systems (Belsky et al. 2004).
Corporatization of Health Care Delivery
Corporatization here refers to the ways in
which health care delivery in the United
States has become the domain of large
organizations. These organizations have
the financial resources to deliver sophisticated modern health care in comfortable
Group Health Cooperative of Puget Sound
in Seattle, operating since 1947, which is
a consumer—owned cooperative prepaid
group practice (Williams 1993), and the
Labor Health Institute in St. Louis, started
in 1945, which is a union-sponsored group
practice scheme (Stevens 1971).
The idea of prepaid group practice had
limitations. It required the sponsorship of
large organizations. HIP, for example, was
created by New York’s Mayor Fiorello La
Guardia for city employees. lndustrialist
Henry Kaiser initially set up his prepaid
plan to provide comprehensive health care
services to his own workers, but the health
plan was later extended to other employers.
The HMO Act of 1973
Health care expenditures in the United
States started to explode after the creation
of Medicare and Medicaid, which enrolled
over 35 million people who then had access
to health care services financed by the
government. The HMO Act of 1973 was
passed during the Nixon Administration,
with the objective of stimulating growth of
HMOs by providing federal funds for the
establishment and expansion of new HMOs
(Wilson and Neuhauser 1985). The underlying reason for supporting the growth of
HMOs was the belief that prepaid medical
care, as an alternative to traditional fee-forservice practice, would stimulate competition among health plans, enhance efficiency,
and slow the rate of increase in health care
expenditures. The HMO Act required
employers with 25 or more employees to
offer an HMO alternative if one was available in their geographic area. The objective was to create 1,700 HMOs to enroll
40 million members by 1976 (Iglehart 1994).
However, the HMO Act failed to achieve
Medical Care in the Cerporate Era 107
this objective. By 1976, only 174 HMOs had
formed, with an enrollment of 6 million (Public Health Service 1995). Employers did not
take the HMO option seriously and continued
to offer traditional fee-for-service insurance
until their own health insurance expenses
started to grow rapidly during the 1980s.
Medical Care in the Corporate Era
The latter part of the 20th century and
dawning of the 21st century were marked
by the growth and consolidation of large
business corporations and tremendous
advances in global communications, transportation, and trade. These developments
have been changing the way health care is
delivered in the United States and, indeed,
around the world. The rise of multinational
corporations, the information revolution,
and globalization have been interdependent phenomena. The World Trade Organization’s General Agreement on Trade in
Services (GATS), which became effective
in 1995, aims to gradually remove all barriers to international trade in various services.
In health care services, GATS may regulate
health insurance, hospital services, telemedicine, and acquisition of medical treatment abroad. GATS negotiations, however,
have faced controversy as various countries
fear that it may interfere with their domestic
health care systems (Belsky et al. 2004).
Corporatization of Health Care Delivery
Corporatization here refers to the ways in
which health care delivery in the United
States has become the domain of large
organizations. These organizations have
the financial resources to deliver sophisticated modern health care in comfortable
States United the in Services Health of Evolution The I 3 CHAPTER 108
main one But, surroundings. pleasant and
health of quality maintaining of expectation
largely remains cost its reducing while care
unrealized.
mid-19803, the until side, supply the On
dominated clearly hospitals and physicians
man- then, Since marketplace. medical the
force dominant a as emerged has care aged
insur- for vehicle primary the becoming by
major- the to care health delivering and ing
care managed of rise The ofArnericans. ity
on power purchasing immense consolidated
imbal- this counteract To side. demand the
and consolidate, to began providers ance,
organizations care health integrated larger,
pas- the with recently, More forming. began
organiza- these of many ACA, the of sage
care accountable into morphing are tions
A 9). Chapter in (discussed organizations
health behind factor uential fl in second,
cuts reimbursement was integration care
services hospital care acute inpatient for
lost for up make To mid-1980s. the since
hospitals sector, inpatient the in revenues
to settings alternative own their developed
surgery, outpatient care, primary deliver
and care, long-term care, health borne spemanaged Together, rehabilitation. cialized
orga- services health integrated and care
the corporatized reality, in have, nizations
States. United the in care health of delivery
has that landscape care health a In
corpora- by dominated increasingly been
struggled have physicians individual tions,
of matter a As autonomy. their preserve to
into consolidated physicians many survival,
partnerships strategic formed clinics, large
specialty own their started or hospitals, with
phy- of trend growing a is There hospitals.
of employees become to choosing sicians
corporations. medical other and hospitals
marketplace shifted has Corporatization
corporations. to individuals from power
insur- health the whether tell to early too is It
established exchanges, or marketplaces, ance
pen- power the move would ACA, the under
consumer. the toward dulum
Revolution Information
trans- being is care health of delivery The
ways irreversible and unprecedented in formed
technol- information telecommunications, by
use Their 5). Chapter (see informatics and ogy,
has research and education, care, clinical in
indispensable. become
were technologies information Medical
postwar the In 1950s. the in developed rst fi
leader the was States United the period,
and science computer of eld fi the in
in computers of uses first the developed
communica- and Information medicine.
the to applied later were technologies tion
Tele- 2007). (Masic oftelemedicine elds fi
when 1920s, the to back dates medicine
radio were specialists medical shore-based
sea at emergencies medical address to linked
the to came Telemedicine 1921). (Winters
technological the with 1990s, the in forefront
image of transmission distant the in advances
ineq- was there that recognition the and data
Amer- rural in care medical to access uitable
rural into poured were dollars Federal ica.
in (discussed E-health projects. telemedicine
unstoppable an become also has 5) Chapter
for demand consumer by driven is that force
offered services and information care health
patient to led has Internet The Intemet. the over
to led has ways some in which empowerment,
patient. the of role dependent the of dilution a
eHealth 2001, in inception its Since
organi- t fi nonpro private a (eHI), Initiative
in leader national a as emerged has zation,
activities advocacy and education, research,
tech- information of use the to pertaining
has It organizations. care health in nology
States United the in Services Health of Evolution The I 3 CHAPTER 108
main one But, surroundings. pleasant and
health of quality maintaining of expectation
largely remains cost its reducing while care
unrealized.
mid-19803, the until side, supply the On
dominated clearly hospitals and physicians
man- then, Since marketplace. medical the
force dominant a as emerged has care aged
insur- for vehicle primary the becoming by
major- the to care health delivering and ing
care managed of rise The ofArnericans. ity
on power purchasing immense consolidated
imbal- this counteract To side. demand the
and consolidate, to began providers ance,
organizations care health integrated larger,
pas- the with recently, More forming. began
organiza- these of many ACA, the of sage
care accountable into morphing are tions
A 9). Chapter in (discussed organizations
health behind factor uential fl in second,
cuts reimbursement was integration care
services hospital care acute inpatient for
lost for up make To mid-1980s. the since
hospitals sector, inpatient the in revenues
to settings alternative own their developed
surgery, outpatient care, primary deliver
and care, long-term care, health borne spemanaged Together, rehabilitation. cialized
orga- services health integrated and care
the corporatized reality, in have, nizations
States. United the in care health of delivery
has that landscape care health a In
corpora- by dominated increasingly been
struggled have physicians individual tions,
of matter a As autonomy. their preserve to
into consolidated physicians many survival,
partnerships strategic formed clinics, large
specialty own their started or hospitals, with
phy- of trend growing a is There hospitals.
of employees become to choosing sicians
corporations. medical other and hospitals
marketplace shifted has Corporatization
corporations. to individuals from power
insur- health the whether tell to early too is It
established exchanges, or marketplaces, ance
pen- power the move would ACA, the under
consumer. the toward dulum
Revolution Information
trans- being is care health of delivery The
ways irreversible and unprecedented in formed
technol- information telecommunications, by
use Their 5). Chapter (see informatics and ogy,
has research and education, care, clinical in
indispensable. become
were technologies information Medical
postwar the In 1950s. the in developed rst fi
leader the was States United the period,
and science computer of eld fi the in
in computers of uses first the developed
communica- and Information medicine.
the to applied later were technologies tion
Tele- 2007). (Masic oftelemedicine elds fi
when 1920s, the to back dates medicine
radio were specialists medical shore-based
sea at emergencies medical address to linked
the to came Telemedicine 1921). (Winters
technological the with 1990s, the in forefront
image of transmission distant the in advances
ineq- was there that recognition the and data
Amer- rural in care medical to access uitable
rural into poured were dollars Federal ica.
in (discussed E-health projects. telemedicine
unstoppable an become also has 5) Chapter
for demand consumer by driven is that force
offered services and information care health
patient to led has Internet The Intemet. the over
to led has ways some in which empowerment,
patient. the of role dependent the of dilution a
eHealth 2001, in inception its Since
organi- t fi nonpro private a (eHI), Initiative
in leader national a as emerged has zation,
activities advocacy and education, research,
tech- information of use the to pertaining
has It organizations. care health in nology
attracted a broad membership from among
the various stakeholders in the health care
industry. Adoption of information technology in health care has been slow, yet the
need for its widespread adoption is clear.
An organization such as eHl is playing an
important role in helping health care organizations navigate through the many challenges that information technology presents.
Globalization
(ii/c}fJc’IffIII’£fftJl’I refers to various forms of
cross-border economic activities. It is driven
by global exchange ofinformation, production of goods and services more economically in developing countries, and increased
interdependence of mature and emerging
world economies. Without corporatization
and information revolution, it is doubtful
that globalization would have become a
growing phenomenon in health care.
From the standpoint of cross-border
trade in health services, Mutchnick and
colleagues (2005) identified four different
modes of economic interrelationships: (1)
Advanced telecommunication infrastructures in telemedicine enable cross-border
transfer of information for instant answers
and services. For example, teleradiology
(the electronic transmission of radiological
images over a distance) now enables physicians in the United States to transmit radiological images to Australia, where they are
interpreted and reported back the next day
(McDonnell 2006). Innovative telemedicine
consulting services in pathology and radiology are being delivered to other parts of
the world by cutting-edge US medical institutions, such as Johns Hopkins. (2) Consumers travel abroad to receive elective,
nonemergency medical care, referred to as
rnedfc*rrl r‘orrrr’.s’m. The Centers for Disease
Medical Care in the Corporate Era 109
Control and Prevention (CDC) estimated
that as many as 750,000 US residents travel
abroad each year to receive medical and
dental care (CDC 2012). Specialty hospitals, such as the Apollo chain in India and
Bumrungrad International Hospital in Thailand, offer state-of-the-art medical facilities
to foreigners at a fraction ofthe cost for the
same procedures done in the United States
or Europe. Physicians and hospitals outside
the United States have clear competitive
advantages: reasonable malpractice costs,
minimum regulation, and lower costs of
labor. As a result ofthese efficiencies, Indian
specialty hospitals can do quality liver transplants for one-tenth of the cost in US haspitals (Mutchnick et al. 2005). Some health
insurance companies have also started to
explore cheaper options for their covered
members to receive certain costly services
overseas. Conversely, dignitaries and other
wealthy foreigners come to multispecialty
centers in the United States, such as the
Mayo Clinic, to receive highly specialized
services. (3) Foreign direct investment in
health services enterprises benefits foreign
citizens. For example, Chindex Intemetional, a US corporation, provides medical
equipment, supplies, and medical services
in China. Chindex’s United Family Healthcare serves Beijing, Shanghai, and Guangzhou. (4) Health professionals move to other
countries that present high demand for their
services and better economic opportunities
than their native countries. For example,
nurses from other countries are moving to
the United States to relieve the existing personnel shortage. Migration of physicians
from developing countries helps alleviate
at least some ofthe shortage in underserved
locations in the developed world.
To the above list, we can add two more:
(1) Corporations based in the United States
attracted a broad membership from among
the various stakeholders in the health care
industry. Adoption of information technology in health care has been slow, yet the
need for its widespread adoption is clear.
An organization such as eHl is playing an
important role in helping health care organizations navigate through the many challenges that information technology presents.
Globalization
(ii/c}fJc’IffIII’£fftJl’I refers to various forms of
cross-border economic activities. It is driven
by global exchange ofinformation, production of goods and services more economically in developing countries, and increased
interdependence of mature and emerging
world economies. Without corporatization
and information revolution, it is doubtful
that globalization would have become a
growing phenomenon in health care.
From the standpoint of cross-border
trade in health services, Mutchnick and
colleagues (2005) identified four different
modes of economic interrelationships: (1)
Advanced telecommunication infrastructures in telemedicine enable cross-border
transfer of information for instant answers
and services. For example, teleradiology
(the electronic transmission of radiological
images over a distance) now enables physicians in the United States to transmit radiological images to Australia, where they are
interpreted and reported back the next day
(McDonnell 2006). Innovative telemedicine
consulting services in pathology and radiology are being delivered to other parts of
the world by cutting-edge US medical institutions, such as Johns Hopkins. (2) Consumers travel abroad to receive elective,
nonemergency medical care, referred to as
rnedfc*rrl r‘orrrr’.s’m. The Centers for Disease
Medical Care in the Corporate Era 109
Control and Prevention (CDC) estimated
that as many as 750,000 US residents travel
abroad each year to receive medical and
dental care (CDC 2012). Specialty hospitals, such as the Apollo chain in India and
Bumrungrad International Hospital in Thailand, offer state-of-the-art medical facilities
to foreigners at a fraction ofthe cost for the
same procedures done in the United States
or Europe. Physicians and hospitals outside
the United States have clear competitive
advantages: reasonable malpractice costs,
minimum regulation, and lower costs of
labor. As a result ofthese efficiencies, Indian
specialty hospitals can do quality liver transplants for one-tenth of the cost in US haspitals (Mutchnick et al. 2005). Some health
insurance companies have also started to
explore cheaper options for their covered
members to receive certain costly services
overseas. Conversely, dignitaries and other
wealthy foreigners come to multispecialty
centers in the United States, such as the
Mayo Clinic, to receive highly specialized
services. (3) Foreign direct investment in
health services enterprises benefits foreign
citizens. For example, Chindex Intemetional, a US corporation, provides medical
equipment, supplies, and medical services
in China. Chindex’s United Family Healthcare serves Beijing, Shanghai, and Guangzhou. (4) Health professionals move to other
countries that present high demand for their
services and better economic opportunities
than their native countries. For example,
nurses from other countries are moving to
the United States to relieve the existing personnel shortage. Migration of physicians
from developing countries helps alleviate
at least some ofthe shortage in underserved
locations in the developed world.
To the above list, we can add two more:
(1) Corporations based in the United States
States United the in Services Health of Evolution The ‘ CHAPTERS T10
operations their expanded increasingly have
number increasing an result, a As overseas.
as overseas working now are Americans of
companies insurance Health expatriates.
having turn, in are, States United the in based
expatri- these for plans t fi bene develop to
insurance 87 of survey a to According ates.
becoming also is care health companies,
ben- employee sought-after most the of one
have that countries in even worldwide, ts fie
Also, programs. insurance health national
at rising is overseas care medical of cost the
the in inflation of rate the than rate faster a
Hence, 2008). (Cavanaugh economy general
is care health of delivery cost-effective the
(2) worldwide. challenge major a becoming
is providers US by delivery care Medical
providers, American overseas. demand in
Clinic, Cleveland Hopkins, Johns as such
several and University, Duke Clinic, Mayo
services medical delivering now are others,
countries. developing various in
health in collaborations Cross-border
by triggered mainly rise, the on also are care
constraints. budget care health worldwide
Japan and States United the example, For
testing and developing collaboratively are
lndia’s 2013). al. et (Uchida devices medical
ser- telemedicine exporting is Group Apollo
Hospital Gleneagles Apollo its from vices
Bangladesh, in patients to (India) Kolkata in
provides It Myanmar. and Bhutan, Nepal,
its from teleconsultation and telediagnostic
Kazakhstan in Oblastu Karaganda in center
Ser- Health with partners and region, the to
International Medstaff and America vices
documenta- billing, for States United the in
records, administrative and clinical of tion
insurance and processes, medical of coding
2009). al. et (Smith processing claim
some produced also has Globalization
world developing The effects. negative pays
coun- these leaves emigration when price a
profession- trained of shortages with tries
countries these in disease of burden The als.
developed the in is it than greater often is
the exacerbates only emigration and world,
ade- provide to countries these of inability
populations own their to care health quate
devel- As 2005). Mazmanian and (Norcini
prosperous, more become countries oping
lifestyles. and tastes Western acquire they
con- health negative instances, some In
increased example, For follow. sequences
lack a in results vehicles motorized of use
with along which, exercise, physical of
preva- the increases greatly diet, in changes
dis- heart as such diseases, chronic of lence
world. developing the in diabetes, and ease
health about information better Conversely,
well as prevention, disease and promotion
pools, swimming and gyms to access as
posi- a making is countries developing in
well-being and health the on impact tive
Globaliza- citizens. middle—class their of
For threats. new some posed also has tion
diseases infectious of threat the instance,
one in appearing diseases as increased, has
coun- other to rapidly spread can country
hepatitis and B, hepatitis HIV/AIDS, tries.
worldwide. spread have infections C
Relorm Care Health ol Era
gov- through reforms incremental Although
the dotted periodically have action ernment
Franklin since landscape care health US
1935 of Act Security Social Roosevelt”s
pro- to program Assistance Age Old (the
health-related for funding government vide
legisla- this of part was programs social
sweep- most the represents ACA the tion),
Medicare of creation the since reform ing
States United the in Services Health of Evolution The ‘ CHAPTERS T10
operations their expanded increasingly have
number increasing an result, a As overseas.
as overseas working now are Americans of
companies insurance Health expatriates.
having turn, in are, States United the in based
expatri- these for plans t fi bene develop to
insurance 87 of survey a to According ates.
becoming also is care health companies,
ben- employee sought-after most the of one
have that countries in even worldwide, ts fie
Also, programs. insurance health national
at rising is overseas care medical of cost the
the in inflation of rate the than rate faster a
Hence, 2008). (Cavanaugh economy general
is care health of delivery cost-effective the
(2) worldwide. challenge major a becoming
is providers US by delivery care Medical
providers, American overseas. demand in
Clinic, Cleveland Hopkins, Johns as such
several and University, Duke Clinic, Mayo
services medical delivering now are others,
countries. developing various in
health in collaborations Cross-border
by triggered mainly rise, the on also are care
constraints. budget care health worldwide
Japan and States United the example, For
testing and developing collaboratively are
lndia’s 2013). al. et (Uchida devices medical
ser- telemedicine exporting is Group Apollo
Hospital Gleneagles Apollo its from vices
Bangladesh, in patients to (India) Kolkata in
provides It Myanmar. and Bhutan, Nepal,
its from teleconsultation and telediagnostic
Kazakhstan in Oblastu Karaganda in center
Ser- Health with partners and region, the to
International Medstaff and America vices
documenta- billing, for States United the in
records, administrative and clinical of tion
insurance and processes, medical of coding
2009). al. et (Smith processing claim
some produced also has Globalization
world developing The effects. negative pays
coun- these leaves emigration when price a
profession- trained of shortages with tries
countries these in disease of burden The als.
developed the in is it than greater often is
the exacerbates only emigration and world,
ade- provide to countries these of inability
populations own their to care health quate
devel- As 2005). Mazmanian and (Norcini
prosperous, more become countries oping
lifestyles. and tastes Western acquire they
con- health negative instances, some In
increased example, For follow. sequences
lack a in results vehicles motorized of use
with along which, exercise, physical of
preva- the increases greatly diet, in changes
dis- heart as such diseases, chronic of lence
world. developing the in diabetes, and ease
health about information better Conversely,
well as prevention, disease and promotion
pools, swimming and gyms to access as
posi- a making is countries developing in
well-being and health the on impact tive
Globaliza- citizens. middle—class their of
For threats. new some posed also has tion
diseases infectious of threat the instance,
one in appearing diseases as increased, has
coun- other to rapidly spread can country
hepatitis and B, hepatitis HIV/AIDS, tries.
worldwide. spread have infections C
Relorm Care Health ol Era
gov- through reforms incremental Although
the dotted periodically have action ernment
Franklin since landscape care health US
1935 of Act Security Social Roosevelt”s
pro- to program Assistance Age Old (the
health-related for funding government vide
legisla- this of part was programs social
sweep- most the represents ACA the tion),
Medicare of creation the since reform ing
and Medicaid in 1965. At the national level,
other small-scale incremental steps in the
interim were the expansion of Medicare
in 1972 to cover younger than 65 disabled
individuals on Social Security and people
with end-stage renal disease, creation of
the Children’s Health Insurance Program
(CHIP) under the Balanced Budget Act of
1997, and creation of Medicare Part D that
added prescription drug benefits under the
Medicare Prescription Drug, Improvement,
and Modernization Act of 2003. Details on
Medicare, Medicaid, CHIP, and the ACA
are covered in Chapter 6.
State Precedents of the Affordable
Care Act
Expansion of health insurance under the
ACA is based on two major historical statebased initiatives——the Oregon Health Plan
and the Massachusetts Health Plan—-both
of which have been perceived as successful
in many respects.
The Oregon Health Plan
The state of Oregon embarked on a bold
initiative in the late 1980s to extend health
insurance coverage to uninsured Oregonians. At that time, the uninsured rate in
Oregon was 18%. The Oregon Health Plan
was formed over several years through successive pieces of legislation. In the end,
reform incorporated three main components: (l) Expansion of Medicaid to cover
people who previously did not qualify.
Delivery of services was mainly through
managed care, which now covers roughly
75% of Medicaid clients in Oregon. The
cost for Medicaid expansion was to be paid
by implementing supply-side rationing (see
Era of Health Care Reform I I 1
Chapter 2). Oregon’s model of rationing
revolved around the creation of a list of
medical services. A state-appointed Health
Services Commission reduced over 10,000
medical procedures to a list of 709 medical
conditions and their related treatments. The
list was prioritized, according to the “net
benefit” of each condition/treatment pair
(Oberlander et al. 2001). (2) The Oregon
Medical Insurance Pool was established as
a state agency with state funding to offer
health insurance to people who could not
buy coverage because of previous health
conditions. (3) An employer nrnrrrdcrrc in
which employers are legally required to
help pay for their employees’ coverage
was installed. The Oregon Plan required
employers to provide medical insurance to
all employees working 17.5 hours or more
per week and to cover their dependents as
well. The law had a play-or-pcry provision
in which employers must either provide
their employees health insurance (play) or
pay into a public health insurance program.
In Oregon’s case, the latter was envisioned
as a special state insurance fund that would
offer coverage to workers not covered by
their employers. This play-or-pay provision, however, never materialized because
the federal Employee Retirement Income
Security Act (ERISA) of 1974 exempts
self—insured businesses from state insurance regulations and taxes. ERISA prevents
states from requiring employers to provide
health coverage or to spend any particular
amount on health coverage (Steuerle and
Van de Water 2009). Obtaining exemption from ERISA has proven very difficult.
Oregon, for one, was unable to obtain federal exemption. Hawaii is the only state to
have this exemption for its employer mandate. The state passed its employer mandate
and Medicaid in 1965. At the national level,
other small-scale incremental steps in the
interim were the expansion of Medicare
in 1972 to cover younger than 65 disabled
individuals on Social Security and people
with end-stage renal disease, creation of
the Children’s Health Insurance Program
(CHIP) under the Balanced Budget Act of
1997, and creation of Medicare Part D that
added prescription drug benefits under the
Medicare Prescription Drug, Improvement,
and Modernization Act of 2003. Details on
Medicare, Medicaid, CHIP, and the ACA
are covered in Chapter 6.
State Precedents of the Affordable
Care Act
Expansion of health insurance under the
ACA is based on two major historical statebased initiatives——the Oregon Health Plan
and the Massachusetts Health Plan—-both
of which have been perceived as successful
in many respects.
The Oregon Health Plan
The state of Oregon embarked on a bold
initiative in the late 1980s to extend health
insurance coverage to uninsured Oregonians. At that time, the uninsured rate in
Oregon was 18%. The Oregon Health Plan
was formed over several years through successive pieces of legislation. In the end,
reform incorporated three main components: (l) Expansion of Medicaid to cover
people who previously did not qualify.
Delivery of services was mainly through
managed care, which now covers roughly
75% of Medicaid clients in Oregon. The
cost for Medicaid expansion was to be paid
by implementing supply-side rationing (see
Era of Health Care Reform I I 1
Chapter 2). Oregon’s model of rationing
revolved around the creation of a list of
medical services. A state-appointed Health
Services Commission reduced over 10,000
medical procedures to a list of 709 medical
conditions and their related treatments. The
list was prioritized, according to the “net
benefit” of each condition/treatment pair
(Oberlander et al. 2001). (2) The Oregon
Medical Insurance Pool was established as
a state agency with state funding to offer
health insurance to people who could not
buy coverage because of previous health
conditions. (3) An employer nrnrrrdcrrc in
which employers are legally required to
help pay for their employees’ coverage
was installed. The Oregon Plan required
employers to provide medical insurance to
all employees working 17.5 hours or more
per week and to cover their dependents as
well. The law had a play-or-pcry provision
in which employers must either provide
their employees health insurance (play) or
pay into a public health insurance program.
In Oregon’s case, the latter was envisioned
as a special state insurance fund that would
offer coverage to workers not covered by
their employers. This play-or-pay provision, however, never materialized because
the federal Employee Retirement Income
Security Act (ERISA) of 1974 exempts
self—insured businesses from state insurance regulations and taxes. ERISA prevents
states from requiring employers to provide
health coverage or to spend any particular
amount on health coverage (Steuerle and
Van de Water 2009). Obtaining exemption from ERISA has proven very difficult.
Oregon, for one, was unable to obtain federal exemption. Hawaii is the only state to
have this exemption for its employer mandate. The state passed its employer mandate
States United the in Services Health of Evolution The I 3 CHAPTER 112
and 1974 in law play-or—pay) true a (not
from exemption limited a get to able was
provide must employers Hawaii, In ERISA.
and insurance health with employees most
that to contribution prescribed a make must
and (Steuerle tax a pay than rather insurance
2009). Water de Van
Plan Health Massachusetts The
the became Massachusetts 2006, April In
that plan bipartisan a pass to state rst fi
cov- universal nearly achieve to intended
four has reform The state. the in erage
mandate individual The (1) features: main
requires 2007) of end the at (implemented
or insurance health have to residents state all
man- employer The (2) penalties. legal face
than more with employers all requires date
a minimum, a at offer, to workers 10
work- permits that plan cafeteria 125 Section
pretax with insurance health purchase to ers
Foundation Family Kaiser J. (Henry dollars
a make to mandated are Employers 2006).
their to contribution reasonable” and “fair
a called fee a pay or insurance employees‘
By 2011). (RAND provision” share “fair
or play around intended) (pun playing pay,
appears it such, as it calling without but
skirt to able been has Massachusetts that
subsidies Government (3) ERISA. around
insur- buy to individuals low-income enable
Commonwealth called feature a under ance
than less are incomes whose People Care.
their have (FPL) level poverty federal the
earning Those state. the by paid premiums
subsidized a pay FPL the of 300% to up
the is plan the of core the At (4) premium.
state’s the of part large a of reorganization
mar- “single a into system insurance private
cen- a and rules uniform with structure ket”
to Connector, a called clearinghouse, tral
of administration and purchase the facilitate
plans. insurance health private
Act Care Affordable the of Passage
health national to obstacles the Despite
this in previously discussed insurance,
House the 2010, 21, March on chapter,
nar- a by passed, Congress in Democrats
Patient the vote, 219-212 of majority row
which Act, Care Affordable and Protection
Presi- by later days 2 law into signed was
the 30, March on later, week A Obama. dent
Edu- and Care Health the signed President
which 2010, of Act Reconciliation cation
law, rst fi the of provisions certain amended
through revenues additional raise to mainly
care health expanded for pay to taxation
comprise laws two the Together services.
called is what of features principal the
commonly also Act, Care Affordable the
Repub- single a Not Obamacare. as known
legislations. these of favor in voted lican
reform Clinton’s of defeat the Unlike
some by criticized were which proposals,
party, own his in leaders congressional
of passage the maneuver to able was Obama
party his uniting by agenda care health his
the for Support cause. common a behind
waffling with deals backroom required bill
with and Party Democratic the of members
and hospital the representing groups interest
the Surprisingly, industries. pharmaceutical
the for support its pledged sheepishly AMA
reversal complete a was which legislation,
health national toward stance historic its of
commentator, one to According insurance.
The itself. protect to tried has AMA the
organiza- powerful the longer no is AMA
17% only represents now it was; once it tion
is It States. United the in physicians ofthe
States United the in Services Health of Evolution The I 3 CHAPTER 112
and 1974 in law play-or—pay) true a (not
from exemption limited a get to able was
provide must employers Hawaii, In ERISA.
and insurance health with employees most
that to contribution prescribed a make must
and (Steuerle tax a pay than rather insurance
2009). Water de Van
Plan Health Massachusetts The
the became Massachusetts 2006, April In
that plan bipartisan a pass to state rst fi
cov- universal nearly achieve to intended
four has reform The state. the in erage
mandate individual The (1) features: main
requires 2007) of end the at (implemented
or insurance health have to residents state all
man- employer The (2) penalties. legal face
than more with employers all requires date
a minimum, a at offer, to workers 10
work- permits that plan cafeteria 125 Section
pretax with insurance health purchase to ers
Foundation Family Kaiser J. (Henry dollars
a make to mandated are Employers 2006).
their to contribution reasonable” and “fair
a called fee a pay or insurance employees‘
By 2011). (RAND provision” share “fair
or play around intended) (pun playing pay,
appears it such, as it calling without but
skirt to able been has Massachusetts that
subsidies Government (3) ERISA. around
insur- buy to individuals low-income enable
Commonwealth called feature a under ance
than less are incomes whose People Care.
their have (FPL) level poverty federal the
earning Those state. the by paid premiums
subsidized a pay FPL the of 300% to up
the is plan the of core the At (4) premium.
state’s the of part large a of reorganization
mar- “single a into system insurance private
cen- a and rules uniform with structure ket”
to Connector, a called clearinghouse, tral
of administration and purchase the facilitate
plans. insurance health private
Act Care Affordable the of Passage
health national to obstacles the Despite
this in previously discussed insurance,
House the 2010, 21, March on chapter,
nar- a by passed, Congress in Democrats
Patient the vote, 219-212 of majority row
which Act, Care Affordable and Protection
Presi- by later days 2 law into signed was
the 30, March on later, week A Obama. dent
Edu- and Care Health the signed President
which 2010, of Act Reconciliation cation
law, rst fi the of provisions certain amended
through revenues additional raise to mainly
care health expanded for pay to taxation
comprise laws two the Together services.
called is what of features principal the
commonly also Act, Care Affordable the
Repub- single a Not Obamacare. as known
legislations. these of favor in voted lican
reform Clinton’s of defeat the Unlike
some by criticized were which proposals,
party, own his in leaders congressional
of passage the maneuver to able was Obama
party his uniting by agenda care health his
the for Support cause. common a behind
waffling with deals backroom required bill
with and Party Democratic the of members
and hospital the representing groups interest
the Surprisingly, industries. pharmaceutical
the for support its pledged sheepishly AMA
reversal complete a was which legislation,
health national toward stance historic its of
commentator, one to According insurance.
The itself. protect to tried has AMA the
organiza- powerful the longer no is AMA
17% only represents now it was; once it tion
is It States. United the in physicians ofthe
plausible that the AMA’s primary motivation was to protect its monopoly over the
medical coding system that health care providers must use to get paid, which generated
an annual income of over $70 million for
the organization (Scherz 2010). The American public was also kept in the dark about
the details buried in the 2,700 pages filled
by the final legislation.
The Supreme Court’s Ruling
After its passage, the law had remained
controversial and unpopular in many circles. Polls showed that nearly two-thirds of
Americans opposed the legislation as too
ambitious and too costly (Page 2010). A
later Gallup poll showed that 46% ofAmericans were in favor of repealing the law;
40% opposed repealing it (Jones 201 1).
Over one-half of the states and some
private parties filed lawsuits challenging
the constitutionality of the ACA. The main
issue in these suits was whether the federal
government had the constitutional authority to mandate people that they either purchase health insurance or pay an income
tax penalty (referred to as the “individual
mandate”). Federal courts in Virginia and
Florida had already ruled against the law on
constitutional grounds.
The constitutional issues finally came
before the US Supreme Court. On June 28,
2012, the ACA cleared a major hurdle to its
survival when the Court, in a 5-4 decision,
ruled that the majority ofACA provisions-~
including the individual mandate-were
constitutional under Congress’ power to tax.
The Court, however, struck down a major
provision of the law. The Court held that the
federal government could not coerce states
to expand their state Medicaid programs
Era of Health Care Reform 113
by threatening to eliminate funding for the
existing Medicaid programs in states that
would choose not to expand Medicaid coverage under the ACA (Anderson 2012).
The Aftermath
The controversy over the ACA lives on.
The majority of Americans continues to
have unfavorable opinions about the ACA.
Republicans, who gained control of the
House of Representatives in 2010, voted
numerous times to repeal the ACA, either
completely or in part (Grant 2013), but
they also failed to propose any alternatives.
Even under threats from the Republicans
to defund the ACA, the Democrats have
not budged, and have asserted that the law
must stand as is, without any revisions. Yet,
on July 2, 2013, the Obama administration
announced that the mandate for employers
to provide health insurance to their employees would be delayed until 2015, although
the individual mandate would go forward.
In the meantime, the main stakeholdersstates, consumers, insurers, providers, and
employers—have been making efforts
to try to comply with the numerous rules
and regulations issued by the Department
of Health and Human Services, the Department of the Treasury, and other federal
agencies. On other fronts, legal battles
have not abated. Some institutions affiliated with religious groups and other private
groups have contended that certain eontraceptive drugs and devices that must be
provided under employer health plans may
cause abortions. Some states have refused
to implement other provisions of the ACA,
such as expanding their existing Medicaid
programs.
plausible that the AMA’s primary motivation was to protect its monopoly over the
medical coding system that health care providers must use to get paid, which generated
an annual income of over $70 million for
the organization (Scherz 2010). The American public was also kept in the dark about
the details buried in the 2,700 pages filled
by the final legislation.
The Supreme Court’s Ruling
After its passage, the law had remained
controversial and unpopular in many circles. Polls showed that nearly two-thirds of
Americans opposed the legislation as too
ambitious and too costly (Page 2010). A
later Gallup poll showed that 46% ofAmericans were in favor of repealing the law;
40% opposed repealing it (Jones 201 1).
Over one-half of the states and some
private parties filed lawsuits challenging
the constitutionality of the ACA. The main
issue in these suits was whether the federal
government had the constitutional authority to mandate people that they either purchase health insurance or pay an income
tax penalty (referred to as the “individual
mandate”). Federal courts in Virginia and
Florida had already ruled against the law on
constitutional grounds.
The constitutional issues finally came
before the US Supreme Court. On June 28,
2012, the ACA cleared a major hurdle to its
survival when the Court, in a 5-4 decision,
ruled that the majority ofACA provisions-~
including the individual mandate-were
constitutional under Congress’ power to tax.
The Court, however, struck down a major
provision of the law. The Court held that the
federal government could not coerce states
to expand their state Medicaid programs
Era of Health Care Reform 113
by threatening to eliminate funding for the
existing Medicaid programs in states that
would choose not to expand Medicaid coverage under the ACA (Anderson 2012).
The Aftermath
The controversy over the ACA lives on.
The majority of Americans continues to
have unfavorable opinions about the ACA.
Republicans, who gained control of the
House of Representatives in 2010, voted
numerous times to repeal the ACA, either
completely or in part (Grant 2013), but
they also failed to propose any alternatives.
Even under threats from the Republicans
to defund the ACA, the Democrats have
not budged, and have asserted that the law
must stand as is, without any revisions. Yet,
on July 2, 2013, the Obama administration
announced that the mandate for employers
to provide health insurance to their employees would be delayed until 2015, although
the individual mandate would go forward.
In the meantime, the main stakeholdersstates, consumers, insurers, providers, and
employers—have been making efforts
to try to comply with the numerous rules
and regulations issued by the Department
of Health and Human Services, the Department of the Treasury, and other federal
agencies. On other fronts, legal battles
have not abated. Some institutions affiliated with religious groups and other private
groups have contended that certain eontraceptive drugs and devices that must be
provided under employer health plans may
cause abortions. Some states have refused
to implement other provisions of the ACA,
such as expanding their existing Medicaid
programs.
States United the in Services Health of Evolution The – CHAPTER3 114
ACA the of requirements Several
The 2010. since implemented been have
particularly however, provisions, main
health of expansion with dealing those
imple- for slated are coverage insurance
con- and complex The 2014. in mentation
challenges thorny faces still law fusing
country. the across implementation its for
implement and espouse fully that States
case a as serve future, the in may, law the
failure. or success eventual its for study
Summary
services care health of evolution The
approximately in States, United the in
from way long a come has years, 150
techno- to care primitive of delivery the
delivered services advanced logically
corporations medical large and small by
national crossed increasingly have that
insur- health for need The boundaries.
Depression. Great the during arose ance
government- where Europe in Unlike
in roots, took insurance health sponsored
began insurance health States United the
of because endeavor private a as mainly
those parallel not did that circumstances
eco- and political, social, Yet, Europe. in
led opportunities and exigencies nomic
government major two of creation the to
and Medicare programs, insurance health
small- then, Since 1965. in Medicaid,
under- were reforms incremental scale
and politically were they because taken
large-scale than acceptable more socially
Ameri- middle-class most how in changes
His- services. care health obtained cans
and beliefs American traditional torically,
against forces strong as acted have values
in changes fundamental initiate to attempts
care. health of delivery and nancing fi the
political through passed was ACA The
consensus seeking without maneuvering,
eth- and values basic on Americans among
divided deeply is nation the Hence, ics.
nancing. fi its and care health of issues over
the policy, national uniform become To
implementation and legal faces still ACA
future its on depend will Much challenges.
failure. or success
Takeaway ACA
‘ Health the by amended as 01 20 of Act Care Affordable and Protection Patient The
Care Affordable the as known is 2010 of Act Reconciliation Education and Care
Act.
‘ and Plan Health Oregon the reforms, state-based two after patterned is ACA The
Plan. Health Massachusetts the
‘
the validated ruling Court’s Supreme US 2012 The
constitutionality
indi- the of
expansion Medicaid left but mandate, vidual up
discretion. state’s each to
‘ United the in level national the at reform care health of era new a opens ACA The
time. some for known be not will effects ultimate its but States,
Americans
‘ ACA. the under reform care health over divided remain
States United the in Services Health of Evolution The – CHAPTER3 114
ACA the of requirements Several
The 2010. since implemented been have
particularly however, provisions, main
health of expansion with dealing those
imple- for slated are coverage insurance
con- and complex The 2014. in mentation
challenges thorny faces still law fusing
country. the across implementation its for
implement and espouse fully that States
case a as serve future, the in may, law the
failure. or success eventual its for study
Summary
services care health of evolution The
approximately in States, United the in
from way long a come has years, 150
techno- to care primitive of delivery the
delivered services advanced logically
corporations medical large and small by
national crossed increasingly have that
insur- health for need The boundaries.
Depression. Great the during arose ance
government- where Europe in Unlike
in roots, took insurance health sponsored
began insurance health States United the
of because endeavor private a as mainly
those parallel not did that circumstances
eco- and political, social, Yet, Europe. in
led opportunities and exigencies nomic
government major two of creation the to
and Medicare programs, insurance health
small- then, Since 1965. in Medicaid,
under- were reforms incremental scale
and politically were they because taken
large-scale than acceptable more socially
Ameri- middle-class most how in changes
His- services. care health obtained cans
and beliefs American traditional torically,
against forces strong as acted have values
in changes fundamental initiate to attempts
care. health of delivery and nancing fi the
political through passed was ACA The
consensus seeking without maneuvering,
eth- and values basic on Americans among
divided deeply is nation the Hence, ics.
nancing. fi its and care health of issues over
the policy, national uniform become To
implementation and legal faces still ACA
future its on depend will Much challenges.
failure. or success
Takeaway ACA
‘ Health the by amended as 01 20 of Act Care Affordable and Protection Patient The
Care Affordable the as known is 2010 of Act Reconciliation Education and Care
Act.
‘ and Plan Health Oregon the reforms, state-based two after patterned is ACA The
Plan. Health Massachusetts the
‘
the validated ruling Court’s Supreme US 2012 The
constitutionality
indi- the of
expansion Medicaid left but mandate, vidual up
discretion. state’s each to
‘ United the in level national the at reform care health of era new a opens ACA The
time. some for known be not will effects ultimate its but States,
Americans
‘ ACA. the under reform care health over divided remain
Review Questions H5
Test Your Understanding
Terminology
almslzoase gatelceeping Part B
balance bill globalization pesthotise
capitation means test play or pay
cost—sl1ifling Medicaid prepaidplan
cross—sz/nbsidization medical tourism socialized medicine
cttltaral authority Medicare Title XVIII
employer mandate organized medicine Title XlX
feefor service Part A voluntary health insurance
10.
11.
Review Questions
. Why did the professionalization ofmedicine start later in the United States than in some
Western European nations?
. Why did medicine have a domestic, rather than professional, character in the preindustrial era‘? How did urbanization change that‘?
. Which factors explain why the demand for the services of a professional physician was
inadequate in the preindustrial era‘? How did scientific medicine and technology change
that‘?
How did the emergence of general hospitals strengthen the professional sovereignty of
physicians‘?
. Discuss the relationship of dependency within the context of the medical profession’s
cultural and legitimized authority. What role did medical education reform play in galvanizing professional authority‘?
How did the organized medical profession manage to remain free of control by business
firms, insurance companies, and hospitals until the latter part ofthe 20th century?
In general, discuss how technological, social, and economic factors created the need for
health insurance.
. Which conditions during the World War 11 period lent support to employer-based health
insurance in the United States?
. Discuss, with particular reference to the roles of (a) organized medicine, (b) the middle
class, and (c) American beliefs and values, why reform efforts to bring in national
health insurance have historically been unsuccessful in the United States.
Which particular factors that earlier may have been somewhat weak in bringing about
national health insurance later led to the passage of Medicare and Medicaid?
On what basis were the elderly and the poor regarded as vulnerable groups for whom
special government-sponsored programs needed to be created?
Review Questions H5
Test Your Understanding
Terminology
almslzoase gatelceeping Part B
balance bill globalization pesthotise
capitation means test play or pay
cost—sl1ifling Medicaid prepaidplan
cross—sz/nbsidization medical tourism socialized medicine
cttltaral authority Medicare Title XVIII
employer mandate organized medicine Title XlX
feefor service Part A voluntary health insurance
10.
11.
Review Questions
. Why did the professionalization ofmedicine start later in the United States than in some
Western European nations?
. Why did medicine have a domestic, rather than professional, character in the preindustrial era‘? How did urbanization change that‘?
. Which factors explain why the demand for the services of a professional physician was
inadequate in the preindustrial era‘? How did scientific medicine and technology change
that‘?
How did the emergence of general hospitals strengthen the professional sovereignty of
physicians‘?
. Discuss the relationship of dependency within the context of the medical profession’s
cultural and legitimized authority. What role did medical education reform play in galvanizing professional authority‘?
How did the organized medical profession manage to remain free of control by business
firms, insurance companies, and hospitals until the latter part ofthe 20th century?
In general, discuss how technological, social, and economic factors created the need for
health insurance.
. Which conditions during the World War 11 period lent support to employer-based health
insurance in the United States?
. Discuss, with particular reference to the roles of (a) organized medicine, (b) the middle
class, and (c) American beliefs and values, why reform efforts to bring in national
health insurance have historically been unsuccessful in the United States.
Which particular factors that earlier may have been somewhat weak in bringing about
national health insurance later led to the passage of Medicare and Medicaid?
On what basis were the elderly and the poor regarded as vulnerable groups for whom
special government-sponsored programs needed to be created?
States United the in Servites Health of Evolution The – 3 CHAPTER ll6
specific with care, ofhealth nancing fi and delivery the in role governments the Discuss I2.
medicine. private and health public between dichotomy the to reference
of prototypes the were practice group prepaid and practice contract how Explain 13.
plans. care managed today‘s
corporatized. become has care ofhealth delivery current which in ways main the Discuss 14.
are activities economic main what services, health in globalization of context the In I5.
chapter‘? this in discussed
against led fi lawsuits in ruling Court”s Supreme ofthe aspects main two the were What 16.
Act? Care Affordable the
REFEREN(ES
tire on ruling ‘s Court Supreme The 2012. Ohio. of Institute Policy Health the and D., Anderson,
httpzll at: Available Ohio. on impact its and decision ofthe review A Act.” are C A_[}‘iii-*ritil:l(a
gripelemcnts.cornlpdf/publications/scotus_ . 8 a2 1 8225edfa4b02.e4d9734e0 1 a5e8c023c88992
2013. January Accessed brief.pdf.
Ann i875. since States United the in €ti‘l€t”pt”l.5‘€ growtlt a as .services Health 1990. OW. Anderson,
Press. Administration Health MI: Arbor,
health for Implications services: in trade on agreement general The 2004. al. et L., Belsky,
137-145. 3: no. 23, A_}_‘7″airs Health policymakers.
Philadelphia, 776—l976. i medicine of/inierican centuries Two 1976. Harvey. A.M. and .l., Bordley,
Company. Saunders WB. PA:
DC: Washington, i976. States. United ofthe abstract Statistical I976. Census. the of Bureau
Commerce. of Department US
at: Available i. 0-17 .20.? handbook, outlook Occupational 1. 20! Statistics. Labor of Bureau
2011. January Accessed http:llwww.blsgovlocolhome.htm.
local and state the to question the Taking charitable‘? really hospitals t fi nonpro Are 2004. J. Burns,
665-683. 3: no. 29, Law ofCorpot-‘ate Journal level.
32-37. 12: no. 108, Review ‘5’ Best network. health worldwide the Building 2008. B.B. Cavanaugh,
care medical tourisni—getting Medical 2012. (CDC). Prevention and Control Disease for Centers
Accessed http:llwww.cdc.govlFeatureslMedicalTourism. at: Available country. anotlier in
July
2013.
The itself. practice the as old as is medicine in error Human evolution: bloody A I998. C. Clark,
0. I Z October, 20 Post, Wasltington
medical Planningfor 1965. LT. Coggeshall. progress
Associa- IL: Evanston, education. tlirougle
Colleges. Medical ofAn1erican tion
Journal Dakota South: blues. new the and Shield Blue of fate The I996. P. Davis,
of
Medicine
49,
323-330. 9: no.
19th late the in disease of impact Social 19?]. J. Duffy,
century.
York New rgfthe Bulletin Academy
1. 81 297- 47: ofMedicine
States United the in Servites Health of Evolution The – 3 CHAPTER ll6
specific with care, ofhealth nancing fi and delivery the in role governments the Discuss I2.
medicine. private and health public between dichotomy the to reference
of prototypes the were practice group prepaid and practice contract how Explain 13.
plans. care managed today‘s
corporatized. become has care ofhealth delivery current which in ways main the Discuss 14.
are activities economic main what services, health in globalization of context the In I5.
chapter‘? this in discussed
against led fi lawsuits in ruling Court”s Supreme ofthe aspects main two the were What 16.
Act? Care Affordable the
REFEREN(ES
tire on ruling ‘s Court Supreme The 2012. Ohio. of Institute Policy Health the and D., Anderson,
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Florida Bar Journal 75, no. 7: 3’i—42.
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education and labor marlrets. M.S. Gordon, ed. New York: McGraw—Hill Book Co.
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994101.
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1. W5-42—W5—5 1: suppl. 24, Exclusive Web —— airs flA Health
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4-7. 1: no. 25, Professions Health the in Education Continuing of
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and Leavitt .W. J health. public and medicine of history the in Readings America: in health and
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intervention
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charitable the on policies state and federal of divergence The “1994. Longest. B.B. and M.A., Potter,
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ed. 4th functions. and Origins
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of development and origin The 1945. J.T. Richardson, group
United the in hospitalization States,
3. no. XX, Studies Missouri of University 1890-1940.
l 75-194 8i practice medical American of structure The 1983. G. Rosen, PA: Philadelphia,
.
Press. Pennsylvania of University
Medicine, revolution: therapeutic The 1979. C.E. Rosenberg, meaning,
social and
change
in
ed. Vogel, MJ. revolzuion. therapeutic The In: America. nineteenth—century Philadelphia,
Press. Pennsylvania of University The PA:
Major in: marketplace. medical Philadelphia The 2001. L. Rosner,
problems
the in
of history
J.A. and Warner J.I-I. health. public and medicine American
Tighe,
Boston: eds. Houghton
Company. Mifflin
nineteenth the in physicians American 1972. W.G. Rothstein,
centiir_v.’
science. to sect From
Press. University Hopkins Johns MD: Baltimore,
muzzle to wants AMA the Why 2010. H. Scherz,
your
Street Wall (The doctor
Journal).
Available
.909364054.html. 75226323 045 I 961 littp:ltonline.wsj.cornlarticleiSB1000l424052748703 at:
2011. April Accessed
States United the in Services Health oi Evolution The 0 3 CHAPTER 118
1: no. 14, Affairs Health failure. reform‘s health of physiology and Anatomy 1995. J.J. Meagan,
994101.
caveats. and markets, GATS, borders: across services health Trading 2005. al. et I.S., Mutchnick,
1. W5-42—W5—5 1: suppl. 24, Exclusive Web —— airs flA Health
Journal care. health and education, migration, Physician 2005. Mazmanian. RE. and .J., J Norcini,
4-7. 1: no. 25, Professions Health the in Education Continuing of
in health and Siclcness In: America. in insurance Health party: third The I985. R.L. Numbers,
R1,. and L-eavitt .W. J health. public and medicine of history the in Readings America:
Press. Wisconsin of University The WI: Madison, eds. Numbers,
Sickness In: science. medical American of maturation The 1985. Warner. J.H. and R.L., Numbers,
and Leavitt .W. J health. public and medicine of history the in Readings America: in health and
Press. Wisconsin of University The WI: Madison, eds. Numbers, R.L.
plan. health Oregon the in reality and Rhetoric care: medical Rationing 2001. a1. et J., Oberlander,
1583-1587. I: i no. 164, Journal Association Medical Canadian
most costly, too law care Health 2010. S. Page, say
ht:tp:ltwww at: Available Today). (USA
.
I 201 January Accessed 0-03—29—health—poll_N.htm. I .usatoday.comi’newslwashingtonl20
A institutions: psychiatric state in discharge Facilitating 2006. al. et ‘J., Patrick, group
intervention
183488. 3: no. 29, Journal Rehabilitation Ps_vchiatric strategy.
charitable the on policies state and federal of divergence The “1994. Longest. B.B. and M.A., Potter,
2: no. 19, Law and Policy Politics, Health of .lournal hospitals. t fi nonpro of exemption tax
393419.
Government DC: Washington, 994. i States, United Health 1995. Service. Health Public Printing
Office.
Sons. & Wiley John York: New functions. and Origins s__vstem.’ health U.S. The I980. M.W. Raffel,
health U.S. The 1994. Raffel. N.K. and ‘M.W., Raffel,
system:
ed. 4th functions. and Origins
Publishers. Delmar NY: Albany,
at: Available Corporation. RAND The mandate. employer of Overview 1.. 201 RAND.
httpzllwww
1. 201 March Accessed randcompare.orglpolicy-optionslemployer-mandate.
of development and origin The 1945. J.T. Richardson, group
United the in hospitalization States,
3. no. XX, Studies Missouri of University 1890-1940.
l 75-194 8i practice medical American of structure The 1983. G. Rosen, PA: Philadelphia,
.
Press. Pennsylvania of University
Medicine, revolution: therapeutic The 1979. C.E. Rosenberg, meaning,
social and
change
in
ed. Vogel, MJ. revolzuion. therapeutic The In: America. nineteenth—century Philadelphia,
Press. Pennsylvania of University The PA:
Major in: marketplace. medical Philadelphia The 2001. L. Rosner,
problems
the in
of history
J.A. and Warner J.I-I. health. public and medicine American
Tighe,
Boston: eds. Houghton
Company. Mifflin
nineteenth the in physicians American 1972. W.G. Rothstein,
centiir_v.’
science. to sect From
Press. University Hopkins Johns MD: Baltimore,
muzzle to wants AMA the Why 2010. H. Scherz,
your
Street Wall (The doctor
Journal).
Available
.909364054.html. 75226323 045 I 961 littp:ltonline.wsj.cornlarticleiSB1000l424052748703 at:
2011. April Accessed
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