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The Medical-Industrial Complex

Men, Money and Medicine

by Eli Ginzberg, by Miriam Ostow
Columbia, 291 pp., $8.50


The American crisis over health has finally taken a place alongside the urban crisis, the ecological crisis, and the “youth crisis” as the subject for solemn Presidential announcements, TV documentaries, and special features of magazines ranging from Fortune to Redbook. But to the average consumer of pills, hospital care, and doctors’ services, the crisis in health care is nothing new, except that the stakes—health, beauty, and life itself—get higher with each advance in medical technology, from miracle vaccines to organ transplants. The odds against the sick are high, and getting higher all the time.

Health care is, first of all, a scarce and expensive commodity. With the increasing centralization of medical manpower and modern equipment in a few big city medical centers, rural areas, small towns, and urban ghettos have been left empty of even the most rudimentary, old-fashioned services. Where services exist, their high cost is the most serious barrier to health care, not only for the very poor, but for growing numbers of working people as well. As the price of medical care mounts, health insurance has become a necessity; but insurance premiums are becoming more expensive too, while benefits dwindle as rapidly as the costs of medical treatment increase.

Money aside, the consumer’s major problem is finding his way about an increasingly impersonal, fragmented, irrationally arranged set of health services. The patient, rich or poor, treks from specialist to subspecialist, from clinic to clinic, from doctor to laboratory, losing more money and time at each stop. No one is concerned with the general state of his health, as opposed to his immediate illness; fewer and fewer doctors are even concerned with the patient’s whole body, sick or well. Long waiting times and brusque service are now almost as characteristic of private doctors’ offices as they are of the hospital clinics used by the poor. And for the very poor, usually black and brown people, the price of care in a hospital’s “charity” ward or clinic is often the humiliation of having his body used as “material” for research and the training of doctors.

The health care itself that the American consumer receives is, in most cases, barely adequate. Despite our uncontested prowess in medical technology, mortality statistics are shamefully high: The US ranks fourteenth among the nations of the world in infant mortality rates, twelfth in maternal mortality, eighteenth in male life expectancy at birth (all figures 1967). More detailed studies show the same bleak picture. For example, a 1964 study sponsored by the Teamsters revealed that no fewer than 40 percent of the New York hospital patients surveyed, all of them Teamster members and their families, were receiving “less than optimal” medical care. Thus, the social cost of the American medical crisis is not just discomfort; it is lives.

The Kennedy-Johnson administrations discovered the health crisis in the early Sixties, at just about the same time they discovered poverty, the neglect of the old, racism, and some of the other indignities of American life. After dozens of government studies, one simple fact stood out: old people, the poor, the blacks are often sick, and, conversely, the sick are often old, poor, and/or black. Infant mortality rates for the poor are twice that of the national average; life expectancies are years shorter; tuberculosis and other infectious diseases, all but eliminated for the middle class, still rage at epidemic proportions in ghettos and rural poverty belts. The Kennedy-Johnson diagnosis seemed obvious at the time: Americans, and especially poor Americans, are not healthy because, among other reasons, they do not receive adequate medical care.

It was not that there was anything seriously wrong with the American health care delivery system per se, the Democratic administrations reasoned. Certainly the United States’ armory of medical technology—research centers, major teaching hospitals, medical schools, and the like—surpasses that of any other nation. But millions of people were for one reason or another excluded from the use of these bountiful medical-technical resources. At least twenty million, and perhaps as many as fifty million Americans were too poor to afford medical care. Additional millions lived in areas lacking all except the most rudimentary medical services. Medical advances, readily available at a few elite urban medical centers, were slow to reach most sick people. The Kennedy-Johnson policy was to intervene energetically on all fronts: Give more purchasing power to the poor, create a few exemplary new health institutions in ghetto and rural areas, and add to this a little gentle governmental prodding toward “planning.”

Programs followed in profusion, adding up to what came to be called the “Health New Deal.” There were Medicare and Medicaid to finance care for the aged and the poor. There were the Community Health Centers and the Community Mental Health Centers (both called for “maximum feasible participation” of the local people who would use them). These, it was said, would provide new points of entry to the medical care system and act as a thorn in the side of the reluctant medical establishment. Finally, there were two federally sponsored efforts at reorganizing and “rationalizing” the health care delivery system: Regional Medical Programs (the “heart, cancer, and stroke” program, or “RMP”) and Comprehensive Health Planning (the “partnership for health” program).

RMP was to stimulate “regional cooperative arrangements” between medical schools and community hospitals, in order to encourage the schools to plan for more effective translation of medical discoveries into medical practice; it would focus on the “killer” diseases, heart disease, cancer, and stroke. Comprehensive Health Planning aimed to create regional health planning agencies throughout the nation, each composed of a “partnership” of local health care consumers, providers (doctors and hospital executives), and government officials.

For the first time, the federal government had stepped into the traditionally private preserve of the health services industry and taken a direct responsibility for health financing and organization. As many liberal critics realized even while the Eighty-ninth Congress was still churning out the Health New Deal legislation, it was in many respects a very tentative step, hedged with scores of concessions to private medical interests. For example, Medicare for those over sixty-five and Medicaid for the very poor had multibillion-dollar budgets which might have made far-reaching changes in the health system. But instead they were designed merely as uncontrolled subsidy programs for hospitals and doctors. Hospitals were paid on a cost-plus basis and doctors allowed what were loosely called their “reasonable and customary” fees, with no regard for the quality or efficiency of the care rendered. Regional Medical Programs and Comprehensive Health Planning were given no authority over Medicaid, Medicare, or any other public money for health; they were left to reorganize the health system essentially on the basis of persuasion.

But if all the parts of the Health New Deal did not add up to a consistent federal policy, or perhaps, as Senator Ribicoff charged in 1968, to any policy, they nevertheless amounted to a good try and, at least in the beginning, a generous one. Between 1965 and 1967, annual federal expenditures for health leaped from $5 billion to $12 billion and a vast new bureaucracy of health workers took root in the suburbs of Washington.

Whether because it went too far, as conservatives charged, or not far enough, as liberal critics saw it, the Health New Deal was, by 1969, a widely acknowledged failure. After four years, RMP and Comprehensive Health Planning were, on a national scale, still so embryonic that Congress seriously questioned whether they should be continued at all. For example, New York City still has no Comprehensive Health Planning agency; it has only an agency set up in late 1969 to plan a Comprehensive Health Planning agency. New York City RMP is at least in the phone book, but it has so far failed to generate a single “regional cooperative arrangement” or even a plan for one.

Both programs foundered on the active or passive resistance of the city’s major hospitals and medical schools. Comprehensive Health Planning has been blocked by the city’s thirty-year-old, private medical center-dominated Health and Hospital Planning Council, which refused to enter into the required “partnership for health” with consumers and local government officials. RMP, which in New York City is administered directly by the city’s seven medical schools, was quietly converted into a petty cash fund for the medical schools’ pet projects.

Even the community health and mental health center programs are faltering, drained by unexpectedly high costs and torn by power struggles between local medical interests and “target populations” who are demanding community control. More than five years after their inception, the community health center programs are still in the “demonstration program” phase, serving, at most, only a few hundred thousand people in the nation.

Compared to the other programs, Medicaid and Medicare at least succeeded in the administrative sense, that is, they exist as programs, and as programs which require ever larger budgetary allocations year after year. But Medicare and Medicaid were the Health New Deal’s worst mistakes. Encouraged by the program’s generous reimbursement formulas, hospitals took the lid off their reported “costs,” and doctors began to redefine “reasonable” fees as the highest they could get away with. Between 1964 and 1969 physicians’ fees rose by 33 percent and hospital charges by 77 percent (several times faster than the rise in cost of living and much more rapidly than in the pre-Medicaid and Medicare years). By 1970, the average consumer—who is too young for Medicare and too “rich” for Medicaid anyway—was worse off medically than he had been in 1964. RMP and Comprehensive Health Planning had brought no new, or better integrated, services to his neighborhood (or to any neighborhood for that matter) and the old services now cost several times more than they had.

Even the Medicare and Medicaid recipients, the aged and the very poor, are not that much better off. Medicare premiums and deductible fees (which the consumer pays for out of his own pocket) have soared. And, since Medicare covers only a limited range of services, recent medical inflation has left old people, with their heavy use of health services, still putting out more cash per year for medical care than the average younger, non-Medicare American. Medicaid recipients have fared no better. Only two states, New York and California, even tried to include comprehensive services under Medicaid. In all states, as costs rose, benefits were cut and the eligibility standards were raised in order to cut down the number of recipients. For example, in New York City, more than one million people were dropped from the Medicaid program between 1968 and 1969. Even those who have remained on the Medicaid rolls have often found themselves unwelcome at private doctors’ offices and private hospitals, and have been forced to continue to rely on the same old charity facilities.

This was the Health New Deal’s legacy to Nixon—a budget, a bureaucracy—and an inflated version of the same old health crisis. The Republicans began auspiciously enough when the President acknowledged in July, 1969, that the American health system was facing “a massive breakdown.” But in the long silence that has followed this announcement, it has become evident that the Administration has been revising this view.

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