THE ORGANIZATION AND FINANCING OF MEDICINE IN THE NEW MILLENNIUM

Abstract

Medicine stands at the threshold of the twenty-first century on two and a half millennia in the traditions of our art (since the founding of his school of medicine by Hippocrates on the Isle of Cos in the Aegean Sea in the fifth century bc); one century of scientific achievement (the development of diphtheria antitoxin in 1891 and the discovery of x-rays by Wilhelm Conrad Roentgen in 1895); and one decade of economic turmoil (managed care in the 1990s). At the turn of the last century, physicians outnumbered nurses, comprising 60% of the labor force. Physicians were predominantly general practitioners. The American Board of Ophthalmology was established in 1917 as the first medical specialty board. In 1890, the patient paid the physician out of pocket or by barter in the form of poultry, produce, or the promise of some services in an agrarian economy. Notwithstanding the organization of medical services by rail and mining companies in the second half of the nineteenth century, the practice of medicine was predominantly a solo endeavor. The American Medical Association joined with organized labor (American Association for Labor Legislation) in 1916 to support health insurance, but organized medicine became increasingly hostile to compulsory national health insurance after World War I. The Committee on the Costs of Medical Care was established in 1927 by a consortium of eight private foundations. After the completion of more than two dozen research papers, most of the Committee published five recommendations in Medical Care for the American People in 1932. 1 1Medical services, both preventive and therapeutic, should be furnished largely by organized groups of physicians, dentists, nurses, pharmacists, and other associated personnel. 2All basic public health services—whether provided by governmental or nongovernmental agencies—should be available to the entire population according to its needs. 3The cost of medical care should be addressed on a group payment basis, through the use of insurance and taxation. 4Studies, evaluation, and coordination of medical services should be considered important functions for every state and local government. 5The breadth, depth, and focus of education and training for the health professions should be expanded. These recommendations would be largely implemented during the remainder of the twentieth century. Early developments in the 1930s included the beginnings of Blue Cross and Blue Shield to finance health services. The Social Security Act of 1935 included Title V to fund maternal and child health programs and Title VI to provide federal subsidies for public health services. Employer funding of health insurance can be traced to a decision of the War Labor Board in 1942. Although wages were frozen, fringe benefits would be negotiable. The subsequent decision by the Department of the Treasury that fringe benefits would not be taxable to the employer or employee brought us to an estimated annual $90 billion of government subsidy of health insurance by the end of the century. Beginning in the mid-1930s, a relentless succession of legislative proposals culminated in Medicare (Title XVIII) and Medicaid (Title XIX) of the Social Security Amendments of 1965. This movement began in the drafting of Social Security in the Roosevelt Administration and signed into law as Public Law 89–97 by President Lyndon B. Johnson in the Truman Library in Independence, Missouri, on July 30, 1965. In the 1990s, the Clinton health program sought a national restructuring and refinancing of health care. It failed for a plethora of programmatic, political, professional, and priority circumstances. With the expiration of the Clinton health care reform, the nation's health care enterprise turned, more reluctantly than enthusiastically, to the managed care sought by corporate America, primarily to control costs.