Rethinking Health Care

Innovation And Change In America

Max Heirich

• Publisher: Routledge
• Year: 2019
• eBook ISBN: 9781000309928
• Edition: 1
• Topic: Politics & International Relations
• Subtopic: Politics
• Index: Politics & International Relations

Rethinking Health Care explains that the context for the reorganization of U.S. health care over the last several decades has been set by broader developments in the national and international political economies and shows how these health care developments have, in turn, affected the larger social and economic transformations that were occurring.

1
Understanding How We Got Here: Creating a Health-Care Industry

About a century ago each of the industrialized nations of the world reorganized its health-care system to follow the canons of a newly developing, "modern" medical science. As early as 1917, however, the path of health-care reorganization and development in the United States took a somewhat different direction from that seen in other countries. Decisions about national health insurance—and the interest group coalitions that formed around this controversy—created a set of veto groups that would influence health-care decisions thereafter. The contrast in how health care has developed has been especially striking during the 50 years since World War II. Most of the other advanced industrial nations developed some form of a national health-care system (i.e., a government-directed or coordinated program to guarantee health services for all citizens). In contrast, the United States at first created a private, professionally-oriented system focused around the concerns of physicians, who wished to set their own standards of care independent of government control, and to give the highest possible care to patients of their own choosing. About 30 years ago that private, professionally-oriented system evolved into something that, with considerable accuracy, now describes itself as a health-care industry. As that name implies, health care in the United States has a unique relationship to the larger economy, and indeed, a unique relation to the social fabric of the nation. Physicians, while still important, no longer are at its center. This chapter seeks to understand how that happened and to identify the kinds of organizational relationships that give the health-care industry its current dynamic.

The central story of what happened does not revolve around the rise and fall of the profession of medicine—that is only one sub-theme of the broader dynamic that has occurred. Nor will an analysis of social inequality, race and class dynamics, or the consolidation of capital satisfactorily explain the changes that have taken place. Many earlier accounts of American health-care developments attempted to fit their analysis into one or the other of these contending frames of reference. Each captures part of the dynamic which has occurred, but misses the larger pattern at work. Professional elites, race and class interests, take on quite different importance and qualities at different points in time, as national and international developments create changing problems, changing coalitions of interest, and new opportunity structures.

In telling the story of what happened, this chapter sketches broadly, a necessary choice in order to cover developments during the 100-year period after modern medical science first appeared in Europe, around 1870, until American health care reorganized itself as a health-care industry, around 1970. Most of the facts that make up this account are well known and often have been brilliantly documented by scholars working from many intellectual perspectives. What distinguishes this account from its predecessors is not its sources of information, but a set of questions that puts together the information others have gathered in ways that let an underlying set of dynamics be seen more clearly.

International Developments Influence the Emergence of "Modern" Medical Science

The half century from 1870 to 1920 saw the rise of modern nation states with international ambitions. These included the new Germany, a reorganized France, and a post-Civil War United States taking its place among the industrial giants. The British Empire's naval preeminence had established a period of relative stability internationally (the Pax Britannica). British bankers were expanding overseas investments, speeding the larger industrialization that was already underway. British bank loans underwrote the economic endeavors of U.S. entrepreneur J. Pierpont Morgan, whose business ventures helped consolidate American business activity and gave rise to a set of giant American corporations that reorganized the American business landscape. Meanwhile the expansion of railway transportation networks all over the world, including a railway system linking the entire United States (a high priority for post-Civil War Congresses) increased the importance of trade. It also created a high demand for steel and became the route by which other American fortunes were made. (Andrew Carnegie's steel mills, for example, provided the raw material for expansion of transportation and industry, and John D. Rockefeller's oil business became a monopoly because of agreements Rockefeller worked out with the emerging private railway system, granting him price advantages over his competitors in exchange for centrally regulated oil production and orderly demand for railway shipping.) In short, it was a time period involving major business expansion and the consolidation of wealth. This broader international pattern, which lasted until disrupted by the First World War, set the context in which "modern" medical science emerged.¹

The international trade network, which had become much more active as the industrial revolution accelerated international trading during the nineteenth century, had brought in its wake a series of epidemics around the world. This focused attention on infectious disease, and after 1870 led to a reorganization of "modern medical science" around the Germ Theory of Disease. Government encouragement of medical research in France and Germany, and private financing in Great Britain and by some of the new millionaires in the U.S. quickly established the promise of a new, international approach to disease. Research into the causes of infectious disease was conducted on silkworms and sheep, species whose infections were affecting the cost and availability of raw materials for the textile industry.² Louis Pasteur in France, Robert Koch in Germany, and other biological scientists in Europe demonstrated the role of microbes, or germs, in the transmission of infectious diseases. They were building on earlier epidemiological research undertaken by civil engineers, who had formed a powerful international Sanitation Movement in the 1850s after they had traced the spread of a cholera epidemic in London to the use of a water source that had become contaminated with human feces from nearby privies.³

The germ theory of disease showed how filth and contamination produced infection, enlarging the range of strategies available for protecting the public. It enlarged understanding of what was involved in disease transmission and introduced the idea of a specific cause for each form of disease. Medical scientists not only built on the earlier work of the engineer's Sanitation Movement, but gradually absorbed it into their own venture (as the public health movement).⁴ Then, a few years later, the British surgeon Joseph Lister used chemistry to discover both antiseptics and anesthesia, which made surgical interventions safer and less painful.⁵ The use of antiseptics greatly reduced the rate of infections acquired in hospitals, making the public willing to use surgical corrections for health problems, and to use hospitals for a variety of other services as well.

In short, the international movement into modern medical science as the preferred strategy for dealing with health and disease occurred as part of a much larger set of social transformations that was occurring at the same time. Modern medical science was enthusiastically championed not only by physicians but also by broader coalitions of interest committed to the idea that applied science problem solving was the route to progress.

American Particularism

As support for modern medical science grew in most industrialized countries, momentum built to make it the center of a national health-care system, with the state guaranteeing access to its services. That did not happen in the U.S., however. A long-standing tradition of nongovernmental control of medicine had solidified almost a century earlier. Citizens on the frontier had resisted state licensing of professionals, arguing that this amounted to restraint on free trade and that they should be free to find local solutions to a shortage of professionals (including especially doctors and cleigymen). Their cause became persuasive when licensed "regular doctors," who did not yet have the germ theory of disease, had problems dealing with an international epidemic like cholera. In contrast, homeopathic physicians who were emigrating from Germany in the wake of the failed revolution of 1848 were having much greater success. For most of the nineteenth century American medicine was treated as a "business" and deregulated. By the turn of the century there was an oversupply of doctors, great rivalry between various medical traditions and the beginning of state regulation. Several states had reintroduced the licensing of physicians, with each medical tradition conducting examinations for the graduates of its medical schools. Meanwhile the free market was creating problems for doctors. Supply and demand in a situation of over-supply had kept fees low, so that physicians' income was similar to that of the rest of the population. Moreover, the expansion of American industry brought with it pressures from corporations to accept fixed-per-capita payment for services provided to a corporations' employees, rather than fees for individual services. With an oversupply of physicians, corporations bargained hard for the lowest rates.⁶

The international movement toward "modern medical science" provided an opportunity for one group of physicians, organized as the American Medical Association (the AMA) to bring a "managed" approach to the development of medicine. The alliances they created and the policy stances they took in the decade before World War I set the direction in which future health-care policy and debate would focus in the U.S. Their way of solving immediate problems confronting doctors as a profession in oversupply set trends in motion that now threaten the health-care system as a whole. Understanding the politics of what occurred will clarify why American health care later became so susceptible to national and international developments outside of health care.

Early in the twentieth century the AMA forged strong links to three groups in a position to influence public policy—to a small set of leading capitalist entrepreneurs and their staffs (especially Rockefeller, Carnegie, and J. Pierpont Morgan), to the presidents of a few elite universities who were advisers to the philanthropic foundations Rockefeller and Carnegie had established, and to leaders in the "non-partisan" Progressive political movement. The Progressives had sponsored antitrust legislation in an effort to control the super-Capitalists' consolidation of holdings but they endorsed applied science and progress as the route to non-partisan planning for the "public good." By foiging a coalition around health care that involved most of the contending economic and political forces of the time, the AMA's agenda triumphed swiftly. Because of its county by county organization of physicians and its focus on political lobbying, the AMA succeeded not only in getting each state to prohibit the practice of medicine by unlicensed physicians, but also gained control of the state and national boards conducting the medical exams, thus guaranteeing that no new physicians could gain the right to practice medicine who were not trained in the canons of modern medical science. Philanthropic foundations established by two of the most successful capitalist entrepreneurs of the time— John D. Rockefeller, Sr., and Andrew Carnegie—played important roles in that political process, providing funds that demonstrated the potential of modem medical science and helping manipulate public opinion to build support for AMA proposals.⁷

Surgery was at the forefront of new developments in "modern" medical science, thanks to the impetus set in motion by Lister's work in England, and surgery was most safely performed in hospitals. At the end of World War I the prosperity of the 1920s and the newly created American custom of expanding health services through philanthropic donations provided fertile ground for the expansion of America's hospital system. In 1873 there had been only 178 hospitals in America. By 1909, there were over 4,300. During the next 14 years the number of hospitals in the United States increased by almost 60 percent, the number of hospital beds by almost 80 percent, and the number of nursing schools rose by 50 percent. By 1927, there were 200,000 registered nurses in the nation.⁸

The account of the "medical revolution" in America which occurred in the early part of the twentieth century has been well told from a variety of perspectives⁹ and need not concern us in detail here. What is important for us to note is that the establishment of modern medical science as the preferred strategy for health care in America occurred as part of a much larger social transformation, and in a context of political struggle. A new coalition of interests took a political strategy being used to pursue "public interest" in a variety of areas—including anti-trust legislation, tax reform, efforts to end the control of cities by political bosses, and the establishment of public utilities—and adapted it to the task of reforming health care.¹⁰

"Public Interest" Planning Generates Problems for American Health Care. As medical science triumphed over its rivals, "public interest" problem solving produced a major consolidation of medical training. Graduates of medical schools that did not conform to the AMA's approved curriculum were unable to pass the new medical licensing exams, and the AMA made sure that test scores were publicly reported, by school. Enrollment in schools the AMA disapproved of dropped quickly, and philanthropic contributions to them stopped. As a result, the number of medical schools in the U.S. dropped sharply. In 1906, there had been 162 of them. By 1915, there were only 95, and the number of students being accepted for training had dropped by 35 percent. By 1929, only 76 medical schools remained.¹¹

From the standpoint of planners who wished to see the triumph of "high quality" training in modern medical science, these results were desirable. Moreover, for doctors affiliated with the AMA, this guaranteed the elimination of competition among doctors in the decades to come. Their lessened numbers, and AMA policies of encouraging doctors of a given specialty to set fees in common, county by county, quickly led to a major increase in income for American doctors. For the general public, however, this consolidation of medical training was a mixed blessing. By the 1920s doctors charged higher fees. The number of physicians available to serve minority populations and people living in small towns and rural areas began to decline. Graduates of elite medical schools increasingly chose urban, specialty practices. With lessened competition, fewer young doctors chose to practice medicine in geographically isolated areas or among ethnic minorities or the poor in urban areas. All but two of the medical schools that trained African-American doctors closed, and African Americans were excluded from internships and hospital privileges in most of the rest. The elite medical schools that survived were less likely than their predecessors to admit students who had not gone to the top colleges, thus making entrance into medicine increasingly the prerogative of children from wealthier families. And for many years the surviving medical schools set a quota limiting the admission of women students to 5 percent of their total enrollment. These changes affected the availability of medical care to various population groups in the years to come.¹²

For a while it looked as though the U.S. would follow the path chosen in most other industrialized countries and would create a national healthcare system providing universal access to health care. Other nations were guaranteeing access to health-care services for all citizens and were producing a variety of universal health insurance plans to implement these policies. Similar movements were afoot in the U.S. but they were stalled in 1917, largely through the efforts of the Metropolitan and Prudential Life Insurance companies which were controlled by J. Pierpont Morgan, the third preeminent capitalist entrepreneur of the period. Because the wording of Progressive movement proposals for universal health insurance made Prudential and Metropolitan Life fear the loss of one of their major sources of revenue, the sale of burial insurance, these two companies mounted a successful campaign to stop national health insurance. When they persuaded the leaders of the New York Medical Association that universal health insurance would lead to governmental control over standards for the practice of medicine on a day-to-day basis, the AMA mobilized its political clout to block the inclusion of publicly financed health insurance as part of health-care reforms currently underway.¹³ With that coalition of opposition (the insurance companies and the AMA) firmly in place, universal health insurance became an insoluble issue in American politics until 1965, when a unique combination of circumstances made it possible to provide government health insurance for the elderly and for people receiving public welfare assistance.

For half a century, solutions to problems or access to medical care could only come through private initiative. The federal government had only a small investment in the funding of health care, primarily through its public health programs. Private philanthropy played a much bigger role. In hea...

Table of contents

• Cover
• Half Title
• Title
• Copyright
• Contents
• Acknowledgements
• Introduction: The Deepening Crisis
• Chapter 1: Understanding How We Got Here: Creating a Health-Care Industry
• Chapter 2: First Efforts at Cost Control
• Chapter 3: Health-Care Innovation in a Rapidly Changing World Economy
• Chapter 4: The 1990s: Efforts at More Basic Reform in a New World Order
• Chapter 5: Contending Strategies for Reform: Underlying Principles, Unanticipated Consequences, and Unmet Problems
• Chapter 6: Origins of New Health-Care Perspectives
• Chapter 7: Holistic Health
• Chapter 8: Prevention and Health Promotion: Industry, the Government, and Foundations Innovate
• Chapter 9: Understanding the Ecology of Health and Disease
• Chapter 10: Reapproaching Health: Next Steps
• Chapter 11: Reapproaching Problems of Cost
• Chapter 12: Reapproaching Problems of Access
• In Conclusion
• Appendix: Tables
• Chapter Notes
• References
• Index