Shelton G. Hopkins, MD
President's Page

Medicare and Universal Coverage

Medicare has long been the bête-noir of American medicine, but for different reasons at different times. A few of us remember when the program started. It was 17 months after the Beatles first performed on the Ed Sullivan Show (if you don't know to what I'm referring, ask your parents or, maybe, grandparents). President Lyndon Johnson indulged in a bit of theater at the bill signing in 1965: he enrolled Harry S. Truman as the first member of Medicare and his wife, Bess, as the second.

There were fears from many quarters that Medicare would result in socialism. And socialism would lead to communism and the destruction of the fabric of America. The AMA strongly opposed Medicare, at first. But, just as the British Medical Association came to endorse British compulsory health insurance within a few years of its 1911 passage, when physician incomes began to rise as a result, the negatives of third-party payment were found to be tolerable. Physicians also came to see that Medicare did not destroy the therapeutic relationship with their patients and that they could still deliver good quality care. In fact, they could deliver better overall quality care because a growing percentage of their patients could now afford it.

America had struggled to provide more extensive health care for years, ever since the world saw the Bismarkian German system from the late 1800s. The American Association for Labor Legislation was an early “think tank” of northeastern academics who wanted to create universal health care in the early 1900s. When the war inductions demonstrated generalized poor health among U.S. workers, the AALL seized on universal health care as a defense issue, stating that questions of “individual liberty” must be weighed against the “protection of the common good.” Remarkably, the AALL enjoyed some real success and were able to shepherd their program partway through several state legislatures.

They were aiming at a federal system, however, not a state one. And when they tried to enlist the American Federation of Labor, under Samuel Gompers, they ran into a wall. He believed in the responsibility of the markets and businesses rather than in governments, and, moreover, had been beaten by federal government-hired thugs on occasion. Not surprisingly, he did not trust the feds. He said “No” to anything that was not directly tied to employer-based insurance. So, the strongest early chance to cover a large part of the population was lost in part because labor did not approve (along with employers, the various types of insurers, and the AMA). It took a back seat until after World War II, when President Truman again tried to get some momentum.

During the 1930s, when Blue Cross became organized and was anointed by the AMA, it had almost no competition. The company was able to use community rating rather than experience rating. Blue Cross was quite successful, and it was successful for hospitals and physicians. Once competitors moved in, however, it was necessary for each of competitor to cherry-pick as best it could. The sickest, poorest and oldest were back to manage the best they could with increasingly sophisticated (and expensive) care.

By 1942, the Farm Security Administration expanded health service to enroll 650,000 poor rural citizens and operated in one third of the counties in the country. The FSA was strongly attacked, but many rural physicians, who otherwise were unpaid, spoke up for it. The U.S. economic recovery that accompanied the onset of World War II, however, spelled the end of the FSA’s program as alternative means of payment arose. Truman’s subsequent efforts to broaden coverage came to naught.

President Kennedy opened the door to a broader coverage, but it was a local boy who actually moved it forward. LBJ recognized that the AMA was alone in wanting to avoid Medicare, and the hospital associations and insurers were in the government’s corner. In the post-assassination atmosphere, the Medicare enabling legislation was passed. But, because of the AMA’s objections, there were no restrictions on pay. Blue Cross based payments on “usual and customary” rates, and physicians still had a free hand with diagnosis and treatment. Thus, the increases in medical expense continued at a rapid clip, as did physician income.

It became evident that this growth could not continue as the level of available treatment continued to rise and the demographics continued to change. Americans have been through multiple efforts to restrain spending on medical care. This has resulted in increasing overhead and increasing workload for the practitioner. Average income has stagnated and dropped as real income. The stereotype of physicians out on the golf course every Wednesday is now a rarity because they have to be on that treadmill to pay the overhead. The impending drops in payment are not sustainable with the current system.

There is a better way. That is what is called a “Faith Statement” because I can’t prove it — yet. More to come.

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