The AMA and its part in the debate, Part 2

Throughout the 1950’s there were efforts to deal with rising health care costs but all were unsuccessful. As modern medicine began to be more exacting and successful the costs associated with such care escalated as well. By the early 1950’s this began to be a national problem. The country was seeing an increase in life expectancy along with a corresponding increase in the numbers of senior citizens. As more and more seniors retired onto fixed incomes and required more and more care the existing system began to buckle under the strain. Almost all health insurance at the time was tied to employment. Most plans worked through the entity of the employer for several different reasons. First, it was an a way in which insurers could control the risks associated with health care because most of the members of the plans were healthy and working age people who needed smaller amounts of health care and were thereby an acceptable risk. The pyramid scheme which is inherent in all forms of insurance requires that a wide base at the bottom supports the upper layers; in this case the wide base was the relatively healthy and stable working class. As people become older they require more medical care. This has long been understood by insurance companies and as long as there is a wide tier of healthy customers at the bottom it is acceptable that there can be another tier at the top that is a little riskier to insure.

This upper tier which was actually drawing money out of the system, mostly the elderly, has never been a good bet for insurance companies and coverage providers have always been notoriously reticent to provide insurance for these people; they are simply not a good risk. As the number of retired workers grew two things happened that were to be the root causes of the failures of the system in the fifties. Many of these people had insurance plans through their workplace and when they retired they lost the coverage of these plans. On top of this growing problem, the costs of health care as it became more specialized and ultimately more successful rose at a much faster rate than anyone had expected so many seniors found that they simply could not afford these costs after retiring. In effect, people were living longer on retirement but the cost of this increase was directly reflected in the medical sector as these people were simultaneously in need of more care and lacking the funds to pay for this care.

This flaw in the system was obvious to all concerned and the calls for government intervention by the public once again set off a chain of events wherein the government began to investigate ways to solve the issue. One would think that an organization of individuals who profess to have the Hippocratic Oath as one of the core principles of their profession would be amongst the first to try to resolve such issues but history has shown again and again that the AMA is much more interested in the financial interests of its members than the health care concerns of patients. Despite repeated reports both public and private that pointed to the need for some sort of changes in the system so that the growing class of elderly citizens could afford health care there was little gain on this front in the early years of the 1950’s due to steady pressure from the AMA and other lobbying concerns to keep the government in any sort of involvement in health care. The new president, Eisenhower, was opposed to the extension of social security to help cover these costs but he promised efforts to rectify the situation for the elderly who could not afford adequate health care. The Health, Education, and Welfare office of the government made several aborted attempts at providing privately subsidized plans to handle this problem but no results were achieved in these efforts and by the late 1950’s the inability or unwillingness of private concerns to deal with the issue led to a renewal of cries for government intervention.

In 1956 the debate over public health care again took center stage in Congress. Welfare costs for medical patients who simply could not afford to pay the rising costs were rising at an astronomical rate and Congress was being pushed to resolve the issue. As a first step Congress formed a Special Committee on Aging to study the problem. The first proposal from this committee proposed that some form of cash payments to disabled citizen’s over 50 be implemented through the existing social security program. This proposal immediately drew heated opposition from the AMA and its allies because it foreshadowed the possibility of government intervention even though the proposal also included the provision that the decision on disability would be left up to physicians. For much of the remainder of the year a behind the scenes battle between the AMA and proponents of the change fought over this addition in subcommittee but it finally passed through this committee in favor of this change.

In late 1957 this plan was formally submitted to Congress in the form of the Forland Bill which would basically allow social security services to also provide for health care for the aged. There were several reasons to believe this bill would be more successful, not the least of which was that it had the support of significant powerful lobbying groups this time around and would not be a case of a strong lobbying group like the AMA being unopposed in their views. The Forland Bill had the active support of the AFL-CIO which gave it some impetus as well as financial backing to form an advertising campaign. It also had the support of the American Hospital Association. The AHA was increasingly concerned by the growing burden on private hospitals that provided care for patients who often could not afford to pay. The growing gap between this care and the government welfare dollars set aside to pay for it was causing considerable hardship for hospital owners at the time.

The AMA immediately rallied in efforts to defeat the Forland Bill, just as it always had in defeating any sort of governmental assistance programs that might affect profit margins for doctors. The standard battle cry had been the same for many years, starting with the AMA President Dr. Morris Fishbein. Dr. Fishbein’s views on the subject were spelled out in the following statement; “All forms of security, compulsory security, even against old age and unemployment, represent a beginning invasion by the state into the personal life of the individual, represent a taking away of individual responsibility, a weakening of national caliber, a definite step toward either communism or totalitarianism”. Dr. Fishbein was also fond of calling such efforts “peasant medicine” and calling those who supported it “medical soviets.”

With the support of the incoming Kennedy administration a compromise bill was pushed through Congress in 1960. The Kerr-Mills bill was a compromise of sorts in that it provided for financial assistance to the aged who could not afford medical services but it was a welfare program based upon a participant first proving that they did not have the means to provide for their own medical expenses. It was also a program that was administered by the states on a voluntary basis with the federal government matching funds after the state volunteered to participate. There were numerous reasons why the program was a failure, primarily because it was not large enough in scope to cover the growing divergence between the elderly’s ability to pay and the rising cost of senior health care. Senator McNamara of Michigan pointed out at its inception that since the program was voluntary for the states it was not likely to provide widespread relief of the situation and he was correct.

At the time, there were some 10 million medically indigent seniors in the country and only some 2.4 million seniors listed on the states rolls for old age assistance. Even if all of the states had participated this program would never have solved the issues we were facing as a country. There were also some 14 million social security beneficiaries already on the rolls so it was easy to see that the Kerr-Mills plan was simply not large enough to address the issue even if the states had all participated. As might be predicted, the states were extremely wary of participating. Three years later, some 18 states had never implemented plans to participate and some 32% of those in need were actually receiving 90% of the assistance from the bill.

The AMA for its part fought the passage of Kerr-Mills but eventually acquiesced when it became obvious that public opinion was widely in favor of government assistance. The AMA considered a smaller program to be a lesser evil as it would necessarily affect their profit margins on a smaller scale. The AMA widely lambasted the idea as the “foot in the door” of communism and socialism and stuck to its mantra that government intervention of any kind was the beginning of the end of American freedom. Not surprisingly, the Kerr-Mills bill was a resounding failure and was eventually repealed after five years but much to the dismay of the AMA there was still widespread support for government health care for the elderly.

Kennedy’s administration pushed for further reforms in the face of the failure of Kerr-Mills to eradicate the problem and another bill was soon introduced to deal with the issue. Surveys at the time estimated that the elderly used medical services twice as often as everyone else. It was estimated that 60% of seniors had less than $1000 dollars in assets and that nearly 55% of the aged lacked any form of health insurance. Obviously, the problem was not going to go away as the cost of health care services these seniors required were rising at a much higher rate than the cost of living.

Even the AMA had to admit there were problems on the horizon that needed solutions. The AMA now suddenly reversed course and suggested that the Kerr-Mills bill they had fought against was a good idea. They also came out with their own plan called Eldercare which would basically extend the coverage of Kerr-Mills to cover more procedures but was still predicated on the states voluntary participation and promised to help only the most indigent amongst the elderly. The AMA either completely missed the fact that most seniors were concerned with losing their whole life savings on just a couple of medical emergencies and the understanding that such incidents would be the inevitable result of such a system or they simply didn’t care. One wonders how an organization that was at the fulcrum of the problem in that it was medical doctors who were doing the treatment could miss the realities of the situation. It is hard to believe that the same doctors who saw these patients every day were so far removed from reality that they couldn’t see the problem but the AMA was still much more concerned with protecting profit margins than any other consideration.

A bill which had the support of the Kennedy administration soon was introduced on the floor of Congress. This bill, King-Anderson, was basically half of what we now know as Medicare. The King-Anderson bill proposed to cover hospital and nursing home care, but not surgical costs or out-patient physician’s services. I suppose these exemptions were an attempt to placate the AMA but it was unsuccessful as the AMA immediately responded with organized campaigns to defeat the King-Anderson bill. It is worth noting that such an exclusion would not have solved the problem in the first place because surgical costs were also skyrocketing at the time but in any case, the AMA was having none of the King-Anderson bill and it began to bring all the powers of persuasion that large budgets, well placed political insiders, and organized wealth can bring to bear on such campaigns.

more to come....