Dead on Arrival

The Politics of Health Care in Twentieth-Century America

Colin Gordon

• Publisher: Princeton University Press
• Year: 2009
• ISBN:
  9781400825677
• Topic: History
• Subtopic: North American History
• Index: History

Why, alone among industrial democracies, does the United States not have national health insurance? While many books have addressed this question, Dead on Arrival is the first to do so based on original archival research for the full sweep of the twentieth century. Drawing on a wide range of political, reform, business, and labor records, Colin Gordon traces a complex and interwoven story of political failure and private response. He examines, in turn, the emergence of private, work-based benefits; the uniquely American pursuit of "social insurance"; the influence of race and gender on the health care debate; and the ongoing confrontation between reformers and powerful economic and health interests. Dead on Arrival stands alone in accounting for the failure of national or universal health policy from the early twentieth century to the present. As importantly, it also suggests how various interests (doctors, hospitals, patients, workers, employers, labor unions, medical reformers, and political parties) confronted the question of health care--as a private responsibility, as a job-based benefit, as a political obligation, and as a fundamental right.
Using health care as a window onto the logic of American politics and American social provision, Gordon both deepens and informs the contemporary debate. Fluidly written and deftly argued, Dead on Arrival is thus not only a compelling history of the health care quandary but a fascinating exploration of the country's political economy and political culture through "the American century, " of the role of private interests and private benefits in the shaping of social policy, and, ultimately, of the ways the American welfare state empowers but also imprisons its citizens.

1

The Political Economy of American Health Care: An Overview, 1910–2000

THE contours of the American health debate emerge most clearly in six historical moments. Between 1915 and 1920, Progressive reformers pressed unsuccessfully for state legislation mandating health insurance for industrial workers. In 1934–35, architects of Social Security toyed with the inclusion of health coverage alongside pension, unemployment, public assistance and public health programs. In the next decade, New Dealers floated various proposals for adding health coverage, an effort that ultimately failed in 1949. After 1949, reformers retreated to the idea of offering coverage to those already eligible for Social Security, an effort that won the passage of Medicare and Medicaid in 1965. Almost immediately, the question of more expansive coverage became entangled with spiraling costs and the competitive implications of employment-based coverage. Such concerns shaped the last two episodes in reform: a tug-of-war between the Nixon administration and congressional liberals in the early 1970s, and the debacle of the Clinton proposal twenty years later.

Health Care and the Search for Order, 1910–1933

From 1914 to 1920 the American Association for Labor Legislation (AALL) promoted a model state bill for employment-based sickness insurance. Like other Progressives, AALL reformers were primarily interested in the impact of industrialization; they proposed insuring wages lost due to illness rather than the costs of care and confined their attention to industrial employees earning less than $1,200 a year. The AALL bill was introduced in three state legislatures in 1916 and eleven more in 1917; it came close to adoption in New York (where it passed the Senate but not the Assembly) and it was defeated by referendum in California in 1918. The AALL attracted a peculiar array of support and opposition. The American Medical Association initially blessed it, although many state medical societies were leery and the support of organized medicine would not last. Although the AALL plan echoed notions of efficiency championed by some business interests, it was condemned by all the important business associations. And while many union locals and state federations threw themselves behind the plan, the leadership of the American Federation of Labor (AFL) dismissed it. Most important, the plan was scored by the insurance industry, largely because it threatened to displace the lucrative market in private burial insurance.¹

The debate was sharpened by American’s entry into the war in 1917. Reformers drew upon the dismal rate of draft deferrals and suggested that “our laissez faire industrial policy has been at least partly responsible for the fact that half of our young men cannot qualify physically when the army calls.” Opponents countered that health insurance was “a dangerous device, invented in Germany, announced by the German emperor from the throne the same year he started plotting and preparing to conquer the world.” By 1919, opponents had largely succeeded in portraying health reform (in the words of one New York doctor) as “Un-American, Unsafe, Uneconomic, Unscientific, Unfair, and Unscrupulous” and attributing its support to “Paid Professional Philanthropists, busybody Social Workers, Misguided Clergymen and Hysterical Women.”²

As the AALL effort faltered, Progressives did win the passage of a federal initiative in maternal health, the Sheppard-Towner Act of 1921. While the AALL proposals were shaped by concern for the productivity and security of male breadwinners, maternal health programs were shaped by a maternalist strain of social intervention that aimed to both mother the poor and Americanize them. Unlike the social insurance programs floated by the AALL, maternal health coverage (in the eyes of opponents) also threatened to undermine the family wage by allowing the state to displace the father. Sheppard-Towner counted uneven success. Funds were limited, and (at the insistence of organized medicine) Congress appropriated money for public health education but not the provision of care. Still, in many settings local health activists accomplished a great deal with limited resources and beneath the professional radar of the medical associations. But conservatives hammered away at the program through the 1920s, eroding federal appropriations and undermining state participation. Supporters went back to Congress in 1926 but won only a two-year funding extension that phased out the entire program in 1929.³ Beyond Sheppard -Towner, the 1920s saw no significant health reform proposals. Republican administrations pressed voluntarist solutions through organizations like the American Child Health Association or events like the 1930 White House Conference on Child Health and Protection and other wise devoted their attention to an ultimately futile effort to reorganize federal health programs around a new Public Health Service (PHS). Private foundations took the lead in efforts to address issues of public health, research, and access to health services. Doctors only sporadically conceded the limits of private medicine and offered no meaningful solutions.⁴

While political attention waned, the problems identified by Progressive reformers and public health officials did not go away. Opponents argued that voluntary solutions be given a chance, but private coverage was paltry. As other welfare capitalist programs flourished, employers rarely offered work-based medical coverage. Insurance offered by commercial insurers, fraternal orders, firms, and trade unions touched only a fraction of the population and, as one observer noted in 1917, “the great mass of the poorly paid workers are in large measure automatically shut out.” Insurers viewed the moral hazard of individual coverage as insurmountable and insisted that “assurance of stipulated sum during sickness can only safely be transacted, and then only in a limited way, by fraternal organizations having a perfect knowledge of and complete supervision over the individual members.” Although (as one observer noted of New York City alone) there were “literally thousands of petty health insurance funds,” these routinely failed through adverse selection or employed“numerous masked technicalities” to avoid paying benefits. And such coverage was not really health insurance, but a combination of wage replacement and death benefits; this was “not a provision for a rainy day,” as one reformer lamented, “but a provision for meeting a single contingent expense, viz, the cost of burying the dead.”⁵ Not surprisingly, there remained a close correlation—measured by per capita doctor’s visits, hospitalization, immunization, or any of the conventional mortality indices—between income In spite of sliding- scale fees and an oftcited tradition of charity care, nearly one-half of those who earned less than $2,000 a year received no care of any kind. Of the $3,565 million spent on care annually (1929 figures), over 80 percent was spent directly by patients, about 15 percent by governments, and the rest by philanthropies and private industry.⁶

The wage and productivity losses cited by the AALL and others increasingly paled beside the rising costs of care—prompting reformers and academics to put together a Committee on the Costs of Medical Care (CCMC) to study the problem. Between 1928 and 1932 the CCMC published no fewer than twenty-seven book-length research reports, five of which detailed and applauded experiments in cooperative medicine or group practice. Although the CCMC promised to “refrain from arriving at conclusions regarding remedy,” many of its members were determined to build a case for group insurance. In the CCMC’s early deliberations, battle lines emerged between medical and reform interests. Its final report, which cautiously endorsed group practice and prepayment, was accompanied by a blistering minority report (signed by eight doctors) that condemned any departure from individual, fee-for-service practice. The CCMC reports (published in the depths of the Depression) had little impact, except as a warning shot across the bow of both organized medicine and the New Deal.⁷

What Kind of Welfare State? Health Care and the New Deal, 1934–1945

The Depression recast the politics of health, both by challenging the charity tradition among financially strapped providers and by introducing an array of federal health programs.⁸ The idea of national health insurance resurfaced during the 1934–35 debate over Social Security. Armed with the CCMC research and Depression conditions, the Committee on Economic Security (the administration’s task force on social security legislation) initially viewed health insurance not just as “equally important” (alongside pensions and unemployment insurance) but as “the most immediately practicable and financially possible form of economic security.” For the CES, the logic of national health insurance was unassailable. Private insurance was “totally inadequate to meet the needs of the population and[held ] no promise of being much more effective in the near future.”⁹ At the same time, national health insurance would (unlike other Social Security programs) simply rearrange private expenditures and accomplish universal coverage with little public burden.¹⁰ The CES proposed combining wage-loss and maternity benefits with a separate system of service benefits—all to be financed by a combination of payroll taxes and general revenues. This was a timid step for a nation which, as one reformer noted, boasted 1934 appropriations of under$150,000 for the Women’s Bureau, under $350,000 for the Children’s Bureau, and over $400,000 for the eradication of hog cholera.¹¹

But the CES retreated and ultimately proposed little more scattered public health spending. By late 1934 CES staff observed glumly that “this Committee and the Administration have lost interest in the subject of health insurance.” The CES was persistently anxious about the reaction of doctors and spent nearly as much time assuaging their fears as it did considering program details. CES staffers admitted privately that their reports were “weak on the question of provision for medical care,” that “extreme care is necessary to avoid the organized opposition of the medical profession,” and that “there is not a very great chance for the adoption of legislation at this Session on the subject.”¹² When the time came to present the committee’s final report, some CES members urged the inclusion of health insurance, hoping that by raising the issue they might lay the ground for future efforts. But those who feared that controversy over health insurance would doom the whole bill won out and the health title was dropped.¹³

The exclusion of health insurance in 1935 was softened by the promise of further study—a strategy endorsed by opponents seeking to stall reform, by politicians eager to express concern without confronting medical interests, and by reformers hoping to keep the issue alive. In 1936 the administration created an Interdepartmental Committee on Health and Welfare Activities (ICHWA) “to survey the whole range of government relationship to the health and medical care activities of the United States.” Like the CCMC a decade earlier, the ICHWA became both an opportunity for reformers to make their case and a lightning rod for opposition. The ICHWA assumed widespread support for national health insurance, reiterated the argument that it would simply reorganize private spending, and sought to add health coverage to Social Security’s social insurance (job-based) and social assistance (welfare) tracks.¹⁴ In response, medical interests replayed their response to the CCMC, arguing that the Committee’s findings had been “cooked” by a cadre of radicals. The administration was lukewarm, especially in the wake of the 1938 elections, and offered little more than increased federal hospital funding.¹⁵ Reformers turned their attention to Congress and persuaded Senator Robert Wagner (D-N.Y.) to incorporate the ICHWA recommendations into what would, for the next decade, become an annual event: the Wagner-Murray-Dingell (WMD) health bill. First introduced in late 1939, WMD proposed to expand Social Security’s public health and maternal health programs and launch new grant-in-aid programs to assist states with hospital construction, indigent care, and disability insurance. Although its congressional sponsors considered the 1939 bill little more than an opening gambit, reformers were optimistic. “Unless the United States is drawn actively into the war,” wrote Michael Davis in late 1939, “legislative action on medical care, federally and in many states, seems certain to take place.”¹⁶

World War II pushed the health debate in a number of directions, some unexpected, some contradictory. For reformers, the democratic rhetoric of the...