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Slide1
A Short History ofHealth Care in America
Philip Madvig, MD
Associate Executive Director
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Slide2“Who knew healthcare was this complicated?”
Photo: http://www.politico.com/story/2017/02/trump-nobody-knew-that-health-care-could-be-so-complicated-235436
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Slide33
Some Disasters are Natural…
Slide4…Some are man made
US Health Care Has Many Challenges
Large uninsured populationHighest costs in worldDisplaces other potential goodsGenerally lower health status than most industrialized countriesSeeming inability to solve problems
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Slide5US Healthcare is fragmented, semi-cottage industry, with dysfunctional payment system
Could have turned out different:
Public health systemGovernment sponsored insuranceHighly integrated, “corporate” systemBut it didn’t…
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Slide6How did we get where we are?
If we understand how we got here, perhaps we can chart our better future
“Those who cannot remember the past are condemned to repeat it”
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Slide7What forces shaped American health care?
Unique American culture Emergence of a powerful medical profession
Central function of the hospitalEscape from corporatizationEvolution of American health insuranceCost Crisis
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Slide8Unique American Culture
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Slide9Self-relianceWho needs a health care system?
DemocraticRepudiate authority and traditional hierarchyNaturalisticLack of scientific basis for medical practice
American Culture: Pre-Industrial
NET RESULT
Little need for health care system, and everyone can be a doctor — housewife, clergy, hat maker, brewer…
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Slide10Rise of citiesPopulation concentrated
Loss of family structureScientific Advances and general respect for scienceDisease originsAntisepsisAnesthesia
Diagnostic toolsPost Industrial America
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Slide11Emergence of a Powerful Medical Profession
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Slide12What is definition of a profession?What does it mean to be professional?
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Slide13Historically weak and not cohesive
“Everybody can be a doctor”No authority in scienceNo barrier to entryNo standardized trainingNo interdependenceInefficient/costly
Emergence of a powerful medical profession
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Slide14Gains in authority
Scientific advances and knowledge and especially therapeuticsDeclining self-relianceWeakened competitionNo scientific credibilityIncreased interdependence Specialization leading to referrals
Hospital as central institution for care
Emergence of a powerful medical profession
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Slide15Barriers to entry
LicensureSupplyStandardization of trainingElevates competence leading to greater authorityReduces supply
Emergence of a powerful medical profession
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Slide16How many medical schools and annual graduates in 2017?How many in 1900?
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Slide17RESULTS
Standardization of Training
John’s Hopkins opened in 1893. It had a 4-year program
AMA makes educational reform a top priority
1904 Council on Medical Education
1906 inventory and grade medical school
REPORT
CARD
A
s
B
s
C
s
82
46
32
“Imperfect, but redeemable”
“Beyond repair”
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Slide18Flexner Report (1910)
Large discrepancy between medical science and medical education
AMA Council effectively becomes national accreditorMedical education becomes standardized more or less as we know it today
As a result of Flexner and other actions:
The number of medical schools and medical students plunge
The profession becomes more uniform and cohesive (with less socio-economic and ethnic diversity. For example, pre Flexner there were 7 black medical schools; post Flexner there were 2)
Supply of doctors declines
“ Society reaps at this moment but a small fraction of the advantages which current knowledge has the power to confer.”
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Slide19Schools and Graduates
Trend in US Medical Schools and Graduates
1850
1925
Schools
Grads
19
1900
Slide20Central Function of a Hospital
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Slide21Transformation of Hospitals
Johns Hopkins
Past
Modern
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Slide22How many hospitals in US?
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Slide23Transformation of Hospitals
Hospitals transformed from “places of dreaded impurity and exiled human wreckage into awesome citadels of science”
Hospitals transformed from social welfare institutions to medical science institutionsHospitals transformed from charities to businesses
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Slide24Transformation of Hospitals
The following changes which occurred in the late 19th century contributed to the transformation of the hospital:
Industrialization accompanied by the rise of the city and the loss of the family of location of careScientific improvements contributing to surgical care (antiseptic technique and general anesthesia)The emergence of nursing as a profession
Medical education requirements
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Slide25$1,200
per bed
These changes lead to an explosion in the number, complexity, and cost of hospitals
Transformation of Hospitals
1870
1905 - 1910
2015
178
hospitals
$4,400
per bed
4,000
hospitals
$3,000,000
per bed
5,564
hospitals
Source: Number of hospitals, AHA, FY2015; cost is that of Kaiser Oakland in 2010
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Slide26Physicians as hospital owners
Formal organization of medical staffTension between medical staff and hospital administration
Interactions between hospitals and medical profession
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Slide27Doctors come to stand between the hospital and its market
Hospital’s revenue comes from patients, but doctors control where patients go. In essence, doctors obtained control of the hospital assets without needing to invest capital
Hospitals did not become systematized partly because of the influence of physicians (noted above), but also because hospitals often developed unique themes (e.g. provided care to specific religious or ethnic groups, or specific medical services)
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Slide28Failure to develop strong public health system
Origins in sanitary reform:
Formation of government health departmentsLate 1800s: in response to epidemics of cholera and yellow feverAddressed conditions favoring epidemics like waste disposal, squalid living conditions, water supply, and use of quarantine
Webster’s dictionary definition
“ Public health refers to the health of the population as a whole especially as monitored, regulated, and promoted by the state.”
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Slide29Physicians resisted public health expansion to provide broader medical care. Sanitary engineering was OK. But, when public health started providing vaccinations and health exams, physicians defended their own interests
Physician resistance
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Slide30Escape from Corporatization
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Slide31Physicians did not want to be subjected to the kind of hierarchical controls that typically prevail in industrial capitalism
But did want control of emerging technology and other professions, e.g. laboratory medicine, imaging, etc.
Escape from Corporatization
“Where physicians become employees and permit their services to be peddled as commodities, the medical services usually deteriorate, and the public which purchases such services is injured.” – AMA 1935
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Slide32Private business had interest in providing medical care
To their own employees through company doctors, and…Potentially to the public for profit, but…
Physicians opposed “Contract Practice”
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Slide33There were other forms of “Contract Practice”
Industrial medicine: the prevention or treatment of industrial injuries could have expanded to address the general health of employeesWelfare capitalism was also attractive to business as a way to resist unions, enhance employee loyalty and guard against socialism
Fraternal associations also represented a form of “contract practice”Group practice (Mayo Clinic and others)
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Slide34Preserving Physician Autonomy
All of these forms were actively resisted by organized medicine, in order to preserve physician autonomy. In particular, to preclude entry of third parties who might control physician practice and extract profit
Bar on corporate practice of medicineLegal decisions in early 20th century held that corporations could not be licensed practitioners, therefore, could not engage in medical practice even if they employed physicians
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Slide35Evolution of AmericanHealth Insurance
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Slide36Bismarck in Germany
Origins in “sick pay” (i.e. protection against wage loss)Part of social protection including unemployment, old age pension, etc.Response to political and social discontentNot regarded as charity but as inherent right to certain benefits and requiring compulsory contribution
Health insurance emerged in Europe in the late 19
th
century
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Slide37In the US, government had little role in social welfare
Federal government relatively weakSocialist movement in US relatively weak
Public health system had been restricted
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Slide38In early 20th century American Progressives proposed insurance system for workers
Cost shared between employee, employer, and stateBenefits to include sick pay, medical costs, maternity costs for spouses, death benefits
CompulsoryExpected to stimulate prevention and result in economic benefit
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Slide39Met with Strong Opposition
AMA supported but objected to capitation as payment and later opposed entire proposalLabor opposed the proposal as a paternalistic intrusion of the state and because the proposal was in competition with the union role of providing social benefits
Business opposedInsurance industry opposed, that is the life insurance industry opposed the proposal because of the death benefit
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Slide40Rising Costs
In the 1930s rising medical costs became a more prominent reason to consider insurance than wage loss. This meant the middle class, not just workers, might benefit from insurance, especially since medical costs are highly unevenly distributed
Committee on the costs of medical care led by Lyman Wilbur, MD, President of Stanford University, findings:National health expenditures equal $3.7 billion, 4% of GDP in 1929Health care costs distributed unequally
Poorest people went without medical care
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Slide41In 1929, 3.5% of the population accounted for 1/3 of all costs. How does this compare to today?
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Slide42Group practice and group payment, but no compulsory health insurance
Wanted to address delivery system first because without improvement healthcare and insurance were too expensiveFelt that it was easier to start with voluntary insurance rather than compulsory insurance
AMA described the Committee’s proposal as “an incitement to revolution”
Committee Recommendations
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Slide43Unemployment insurance
Old age pensions“Health insurance will have to wait.” – Committee on Economic SecurityAMA began to describe terms under which they endorse an insurance proposal:Voluntary not compulsory
Under control of local medical societiesNo third party involved in physician business
The US Depression revised the priorities for social reform
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Slide44End of WWII Truman calls for national program with compulsory insurance
“Medical services absorb only 4% of national income. We can afford to spend more for health.”Under this plan “people would continue to get medical and hospital services just as they do now.”Effort to differentiate from socialized medicine given threat of communism
AMA reacts with largest lobbying campaign in historyTruman plan failed to pass
The Truman Plan
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Slide45Private employer-based insurance emerges partly as a result of union negotiations
Veterans health system createdPre-paid plans emergeGroup Health in SeattleHIP in NYCKaiser Permanente on west coast. “The closed panel colossus”
Plans Emerge
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Slide46Great Society / War on Poverty, President Lyndon Johnson
Creation of Medicare 1965Association with Social Security and acknowledgement of disproportionate health needs of agedCreation of Medicaid 1965 for the extremely impoverished population
Physician interests accommodated by allowing usual and customary payment through fiscal intermediary (aka Blue Shield)Hospital interests accommodated by reimbursement based on cost, including cost of capital, and use of fiscal intermediary (aka Blue Cross)
Great Society / War on Poverty
Therefore, there is no incentive to manage cost of care or to rationally organize a more efficient system of health care
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Slide47Cost Crisis
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Slide481970s health care cost crisis
$69 billion (7.2% of GDP) in 1970By 1980 $230 billion (9.4% of GDP)Government is now responsible for much larger share of cost
Cost crisis continues
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Slide49Changing costs over time
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Trend in Health Care Costs, Percent of GDP
1929
2014
COSTS, % GDP
$3.7 Billion
$3.021 Trillion
Slide50Reactions
Interest in pre-paid, organized health care systems — HMO ActWage and price freeze
Certificate of Need and other regulationsResumed call for national health insurance — Richard Nixon vs Ted KennedyWatergate put an end to the call for national health insurance
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Slide51Corporate transformation of medicine,sort of…
As health care becomes more than 10% of GDP, controlling costs and extracting profit gain interest
Hospital systems emergeInsurance industry consolidates and converts to for-profitVertical integration attemptedBut, many of these changes are seen as gaining market power without transferring efficiencies to consumers
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Slide52Quality Questioned: IOM reports
To Err is Human100,000 deaths/year from harmCrossing the Quality Chasm
“Between the health care that we now have and the health care that we could have lies not just a gap, but a chasm”.
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Slide53Clinton, Obama
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Photo: https://www.nbcnews.com/meet-the-press/why-obama-campaigning-so-hard-against-trump-n593111
Slide54Repeal and replace
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Slide55Trump, Republicans
“Who knew healthcare was this complicated?”
Photos: http://nymag.com/daily/intelligencer/2016/11/under-president-trump-big-changes-are-on-the-way-for-america.html; https://www.today.com/video/lindsey-graham-devin-nunes-conducting-an-inspector-clouseau-investigation-908139075543
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