Political Science 317
Study Guide #2
The Social Transformation of American Medicine
The Abraham book gave us a sense of how the American health care system operates today. But how did we end up with such a complex, fragmented system? To understand why, for example, we have a national program for those over 65, but not for children, or why we have such a complex array of private employer-related health insurance options, we have to know the history of American health care policy. That is the purpose of this book. Notice that while providing the history, Starr is also trying to explain it. In particular he’s trying to explain something that is at the center of this course: why does the American health care system look so different from the systems of other affluent nations? His explanation is complicated, and you shouldn’t take it as gospel—as you’ll see in the next few weeks, there are many competing explanations. But I want you to at least be able to understand his explanation and be able to talk about it intelligently.
The book was written in the 1980s and ends with a surprisingly accurate prediction of what the next two decades of health policy would look like. (All the same, we will read next a summary of the past twenty years of health policy written by authors who actually observed it.) This is a very rich book that covers an enormous array of topics, from the growth of medical malpractice litigation to the development of “alternative” medicine, but there is a grand narrative that runs throughout it. The medical profession used its political power to fend off government control over its practices, even while securing more and more government funding for health care. The consequences of this are clear: The combination of increasing government funding and few cost controls led to skyrocketing health care spending. This in turn has led policymakers to search for ways to use the “market” and the private sector to control costs. The irony, then, is that in resisting government control so strongly, the doctors may have simply traded in one set of masters for another.
The narrative of “managed care,” the first big private sector response to health care costs, has its own ironies . . .but that’s for later in the course.
Origins (235-279)
Why are “intermediaries” a threat to doctors?
What two patterns of health insurance policy emerged in Europe around the turn of the 19th century?
The more “authoritarian” and paternalistic countries in Europe developed social welfare programs before more egalitarian nations. How does Starr explain this? (Important point about this section. “Liberal” here is used in the 19th century sense. A 19th century liberal believed in freedom from government regulation of all types, and political reform to expand the vote to a wider group of citizens. Liberals believed in the power of free markets. On welfare issues a 19th century “liberal” is more akin to what we today in American would call a “libertarian” or even a “conservative.” So in the standard, 19th century sense Starr is arguing that liberal societies lagged in terms of providing national health insurance.)
Why did Germany and England develop health insurance programs?
How does Starr explain “Why American Lagged”? Why weren’t American unions more favorable to government-provided health insurance?
What United States group first championed health insurance? Why did the AFL, the largest labor union, oppose their plan? What was the attitude of employers? Private insurers?
Why did the Progressive-era attempt to create health insurance fail? On what bases does Starr argue that an interest group-based explanation is not sufficient?
Starr notes that in Germany and England no one really opposed compulsory health insurance. Why not? What difference in government structure between the U.S. and Germany is important, according to Starr?
What reforms did the CCMC recommend? Why did the doctors dissent?
Why was health insurance omitted from the 1935 Social Security Act? In what ways did the federal government nonetheless become a funder of health care starting during the Depression?
President Roosevelt sponsored a National Health Conference in 1938. Why did this event not stimulate a big national health insurance program?
What is wrong with following explanation for the defeat of all attempts to create a health insurance system in the United States through World War II: “Americans didn’t want government health insurance because they value individual freedom too much”?
Discussion Question:
Imagine what social scientists call a “counterfactual”: How would history have to be different in order for the United States to enact a national health insurance program? What is the smallest possible change in events that would have led to this outcome? Or are you convinced that fundamental features of American society and politics ruled out the creation of national health insurance, so that small changes in history would have had no impact?
The Rise of Private Insurance (280-334)
What were the main aspects of the Truman plan for health insurance? Who opposed the Truman proposal?
In what sense was the health care debate “intensely ideological”? Why was the anti- side able to take advantage of the malleability of public opinion?
Starr says that instead of universal insurance, American society provided insurance to the “well off and well organized.” Who were the well organized? (This is a rule in political analysis: organized groups usually beat unorganized groups, even when the unorganized are much larger and seemingly have better claims.)
What is moral hazard? How do private insurers try to control it? Why is health insurance particularly prone to it? (How do the seniors in Boca Raton that we read about illustrate it?)
What are the three types of health insurance? Which of the three—until the 1980s—predominated?
What is Blue Cross? How did it start?
What is a medical cooperative? How did it arise? What crime did the AMA commit in order to oppose them?
What is Blue Shield? How did it start?
Starr uses the term “private social security.” What does he mean? How does it relate to the Wagner Act?
Easy to miss: How did the tax subsidy for employee health benefits begin? (Hint: it was during World War II, when the government was trying to keep inflation down.)
How did health benefits become part of labor negotiations?
What problems did employee-based insurance plans face in the post-war period?
How did my old insurer, Kaiser, survive where other “direct service” insurers failed?
What is experience rating? Why are private insurers driven to use it in a competitive market?
Starr says: “Channeling health insurance through employment helped satisfy many interest simultaneously.” How so?
How did the rise of private insurance slow the drive for universal health insurance?
Discussion Question:
Agree or disagree: Private health insurance is inherently flawed because of moral hazard and “adverse selection”—the healthier leave because they don’t want to pay for the sick, which in turn drives up premiums. Private health insurance is inherently unstable and unable to control costs.
(You might compare private health insurance to universal government health insurance. Can a universal government program do any better?)
The Birth of Medicare and Medicaid (335-378)
Liberals and the AMA disagreed about national health insurance in the post-War period, but managed to agree on much else. What did they agree on? How did this agreement profoundly shape health care in the post-War years?
How did postwar policy “tilt toward the hospital”? (Hint: Hill-Burton.) How did it tilt toward specialization and away from the old family practioner?
What were the effects of all that hospital building in the post-War years?
What forces contributed to the development of Medicare and Medicaid according to Starr?
How did Medicare “A,” Medicare “B” and Medicaid get packaged together in one bill?
Why did the Neighborhood Health Centers lose out to the Medicaid program? (How might the Banes’ story be different if the NHC’s had proliferated, as Donald Rumsfeld—yes, that Donald Rumsfeld—wanted?)
How did “The Blues” get wrapped up in Medicare administration?
Starr: “The American pattern has been to rely on the market. And curiously, the programs of the 1960s not only followed that pattern but strengthened it.” How so?
The Failure of Reform (379-419)
What does Starr mean by “the end of a mandate”?
Why did health costs increase so much in the 1960s? (What does Starr mean by “the contradictions of accommodation?)
What was arguably oversupplied because of government policy? What was arguably undersupplied?
What is an HMO? (Hint: Kaiser) How did it fit into Nixon’s health care strategy?
What are IPA’s? (Hint: today we call them PPO’s.)
What is “Certificate of Need”? Why did it and other attempts to control supply through regulation fail?
Nixon championed a national health insurance program that was arguably more sweeping and liberal than the later Clinton plan. Why did it not become law?
After a period of impasse during the Carter Administration, a new conservatism, punctuated by the election of Ronald Reagan, dominated health policy. What was the new conservative approach to health care?
The Growth of Corporate Medicine (419-449)
What does Starr (rightly, we’ll see) forecast for the rest of the 20th century?
How does the experience of Fairview Hospital (the hospital in which I was born, and in which my mother and I worked for many years) reflect trends in health care in the late 20th century?
Why is Starr skeptical that larger chains of hospitals will reduce medical costs?
What is the new threat to doctor autonomy? (If the old threat was government.) How is the medical profession changing as a result in the transformation of the health care industry?
Discussion Question:
Suppose someone from outside the class asked you: why is the American health care system so different from others? Suppose further that you were asked to answer the question as Paul Starr would. In one paragraph, what would your (concise) answer be?