What it was like before the feds took over heath care
I’d like to supplement my general comments below with some personal observations.
First, I should tell you that I’m from a medical family: My father was a general practice physician; his brother was a prominent medical researcher. My mother and sister-in-law are nurses. My brother is an OB-GYN, my wife a former psychiatric social worker. Among the rest of my family are a variety of physicians and other health-care professionals. The joke is that, as a law professor, I’m the failure in the family. But my point is I have a fair amount of personal exposure to the system.
Most of you know what the system is like now so I won’t go into that. But here’s what it was like before the federal government invaded health care in a big way in the mid-1960s and hugely expanded third-party (government & insurance) payments:
* We had the finest system in the world, probably by a wider margin than is true today.
* The price for an office visit was about $25 (before meds) in today’s money (about $6 then). You read that right: Twenty-five bucks!
* Family doctors made house calls at a cost of about $30 in today’s money. House calls!
* Most people could afford all but the most catastrophic health care.
* All states had health-care programs for the poor, most supplemented by the federal-state Kerr-Mills program for seniors, which was (unlike Medicare) focused on the needy.
* Physicians were an independent breed, unlike many today, but there was a strong medical ethic of providing free and reduced-cost care. Often the physician would charge a reduced fee without the patient knowing it was a reduced fee; the patient thereby preserved his self-respect. Self-respect — there’s something you don’t see much in the system today.
* Bureaucracy was rare, and decisions were made beween doctor and patient
It is tempting to speculate on what the system would be like today if the feds had not expanded their role beyond Kerr-Mills. The following are reasonable guesses:
* Office visits would cost around $25, maybe less.
* Doctors would make housecalls, using portable computers and the Internet to remain linked to the office and connected to medical libraries.
* There would have been huge advances in drugs and medical technology, but because patients would be paying directly, the focus of innovation would be on volume and affordability. Not as many MRIs, but a pill to cure the common cold.
* Because preventive treatment would be so much cheaper than it is today, life expectancy might be several years longer.
* Health insurance would exist, but would be used mostly to cover catastrophic events.
Sound good? We can have it all again — if we demand it.
You’re so right that is almost hurts.
But – sadly – let’s not kid ourselves. America is driving faster and faster towards single-payer/universal healthcare. The question is not how can we prevent it – because I think it’s tragically inevitable – but how can we mitigate the damage?
Step 1, David, eliminate all gov’t schools.
Why, oh why, did Medicare ever come to be? I’ll give you a hint – it has something to do with the fact that insurers wanted nothing to do with older people, since they were not profitable, and left them to charity, if charity could be found. Senior health was a problem, and each and every one of them was exposed to loss of life’s savings due to illness. That’s the greatest comfort provided by Medicare – that seniors don’t have to worry about illness-caused poverty. The very idea that the government stepped in and ruined a system that was working is fanciful. You’re out of touch, completely.
Here’s how it works, Mr N: Private insurance works in the employer-funded system because employees are a wide cross section of the population. Therefore, when employers take out group policies, by definition, adverse selection is avoided. Once you leave the employer-financed system, private insurance doesn’t work unless insurers are able to reject coverage for unprofitable clients. These unprofitable clients include the elderly, those with pre-existing conditions, and the poor.
You will note, and it is no accident, that private insurers have dumped exactly those groups on government. They weren’t profitable.
Mr. Natelson, as I read this piece I have never been less impressed with you – you have a cushy government job, you have a secure retirement, and you have guaranteed health care for the rest of your life. None of the problems that afflict ordinary people apply to you. And you sit there and proscribe for them as if their lives were as cushy as yours.
It’s time to stop proscribing. You’re out of touch. Step aside. We have real problems, you have no solutions. It sounds as if, growing up, you had as little exposure to real people with real problems as you do now.
Your ideas about how it would be if government had not stepped in are about as far-fetched and fanciful as anything I have ever read. Good grief.
Now it makes sense to me why you are such an advocate to keep government out of the medical field. “First, I should tell you that I’m from a medical family”
Something just told me by reading your posts that they seamed tainted, why the big hangup on the government and healthcare.
I suppose you will tell me that you being froma medical family has no bearing on your position right?
Mark T. -
You are great at slamming people, but not so good at coming to grips with the issue — particularly when you don’t actually bother to read what you are slamming — as in this post and the one about the non-secular constitution.
For example, in your comment about “why Medicare came to be,” you disregard the fact — clearly stated in my post — that there was ALREADY a federal-state program that covered those elderly who could not afford insurance: the Kerr-Mills program.
Medicard came to be because the 1960 Kennedy-Johnson ticket needed an issue to appeal to some middle-class people who wanted something for nothing. But while Kennedy was alive, his Medicare proposal got nowhere. Then he was assassinated, and everything about him became (for a while) sancrosant, and Congress passed some things that never would have been passed otherwise.
Interestingly, as I recall part of the sales pitch for Medicare was that it would require a payroll tax of only 1/4 of a percent from employers and 1/4 of a percent from employees! I remember my father (a physician) saying at the time that that was mendacious and absurd, and boy was he right.
Mark, I wrote a “theoretical” post earlier so you carped about my reliance on economic theory and academic research. So wrote a post — and I confess it was partly to test you — based on anecdotal, but real-life knowledge of people who have worked in the system for something like a cumulative total of 120 years. Well, you dismiss that because of irrelevancies like my job (of all things)!
All the while, you still fail to come to grips with my fundamental argument about the role of third-party payer in driving up costs.
So you flunked my little test, and pretty much have demonstrated that mostly what you want to do is just snipe.
How clever. You’re really awesome.
You say that Kerr-Mills covered people who could not afford insurance – you’re completely missing the point. At that time, medical costs had to virtually wipe someone out before assistance was available. You’re not seeing the purpose for Medicare – to protect the poor and the estates of senior citizens, allowing them to live in relative security without the fear of being wiped out by illness. It’s a wonderful gift we give to our seniors. You also fail to address the notion that health insurance was even available to people who were sick – if things were then as they are now, adverse selection would have undone any insurance for the elderly. It only works when insurers can exclude those likely to get sick.
In your world, people first had to be wiped out by health care costs, and then could be treated as poverty cases. Not hardly adequate.But that was Kerr-Mills.
Medicare was a hard-fought battle – the AMA had to be bought off – doctors had to be guaranteed their fees would not go down. How it ever got passed I don’t know – we had different and tougher politicians in those days, I suppose. Laying it at JFK’s feet is a little but humorous.
I have not griped about your reliance on academic research. Not hardly – what I have said is that you seek out those things that support your pre-existing views, and shut out all else. I’m suspicous of you, to be frank. I doubt your dedication to pursuit of truth. What I sense is more a dedication to a philosophy that others have called Utopian – the notion that free markets solve all problems if left to function. To hold those kinds of views, you have to shut out a lot – most of what goes on around you, quite frankly. You have to limit yourself to a narrow group of studies that support your beliefs. You see, there’s a problem. Free markets, if they even exist, don’t work.
Health care costs have gone up, are going up. Much of the reason is that we are far better at curing people than we were years ago. But every improved procedure, every device, comes at a cost. Once they are proven effective, they are adopted, as not to use them would not be ethical. It’s going to have to stop someday – we are faced with rationing as it is, and it will only get worse. We’re at 16% of GDP (other countries are around 7-10%), and it will only get worse as we get better at curing things.
I like to complain? Maybe. I don’t react well to phonies, and I think I’ve spotted one. I thought so years ago when I called your radio program and asked you to cite one of your famous “studies have shown” statements. You said there were so many … too many to cite. It triggered my suspicions about you, and they’ve not been settled since. That, and the way you used a campaign based on lies to deep-six income tax reform in the early nineties made me, well, let’s just say, not a fan.
Remarks in Mark T.’s last two comments alone:
* “never been less impressed with you”
* “cushy government job”
* “out of touch”
* “little exposure to real people”
* “phony”
* “lies”
.* . . a strawman (“the notion that free markets solve all problems…”)
* And a reference (inaccurate) to a petition drive from 15 years ago.
Yep, it does sound like a lot of sniping, doesn’t it?
But that’s okay — statists are particularly fun when they get mad.
“You say that Kerr-Mills covered people who could not afford insurance – you’re completely missing the point. At that time, medical costs had to virtually wipe someone out before assistance was available.”
I won’t presume to try to write the history of government intervention in healthcare, but I can point out a dilemma that I have faced with my clients in the past.
Under Medicare, one is expected to exhaust his or her own resources prior to having the government assume responsibility for long-term (usually nursing home) care. With proper planning, one can avoid this eventuality for the most part.
The issue, though, is this: If I have accumulated assets through my lifetime, and then I need long term care, who should pay for it? Should my assets be spent for my own care, thus eliminating my estate on death? Or, should the taxpayers (you) step in and pick up the tab in order to ensure that what I have accumulated passes to my devisees?
It should be paid of course by the person who is receiving care.
It’s funny to me that those in favor of government run health care think otherwise. Why should anyone else pay MY medical bills??
Gregg – you’re confusing Medicare, which does not provide for long-term care, with Medicaid, which does. Under Medicaid, people are required to “spend down” their assets until they reach $2,000, with exceptions for the home and some assets of a non-institutionalized spouse, and a funeral trust. Then Medicaid steps in and reimburses for care. It’s an extremely expensive program.
Under Kerr-Mills, the same principle was applied to general health care – you had to go broke before you qualified. Medicare removed that requirement and provided financial security from medical bankruptcy for our elders. It too is very expensive.
Rob – the blogs are not your newspaper column, we are not your students. You are used to preaching, usually to a choir. I’ve been hard on you, and it hasn’t been easy for me – I don’t like hounding you. But you carry with you very extreme views wrapped up in an intellectual cocoon – that is, you don’t just present those views for debate, but drop them on us in the form of pre-selected studies as if you have the final word to give us in your initial argument. I’m glad you came out to the blogs, I urge you to get your fingers burned at some of the liberal and progressive blogs too. (I notice you confine your lectures to this spot.) You’re not going to get a free ride anymore. You’re just Rob, a blogger, with extreme views, who takes a beating when he expounds on them.
Mark t. said- “Free markets, if they even exist, don’t work. ”
Ever hear of the cold war? Do you know which side won and why? There is a certain irony to Mark t. saying others have “extreme views”.
MarkT, you’re right. I was referring to the Medicaid spend down. Sorry about that.
The question is the same, though, isn’t it? Who should pay?
Mark J –
Re: your comment — “Something just told me by reading your posts that they seamed tainted . . I suppose you will tell me that you being from a medical family has no bearing on your position right?”
Mmm….
Some folks think I’m an academic divorced from the real world, and that explains why I disagree with them. You suggest I’m too personally involved, and that explains why I disagree with you.
Can’t you folks discuss a position rather than a proponent?
Once again: My position is that the feds’ enormous expansion of the third-party payer system after the mid-1960s drove up costs, hurting almost everyone that was supposed to be helped.
Before the federal intervention, there were some people who could not afford health care. After the intervention, almost nobody can afford health care. And giving the patient more of the same poison is not going to make him well.
Mark T, you remind me of the subject of this 1943 essay by Isabel Paterson: http://www.mises.org/story/2739
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If the primary objective of the philanthropist, his justification for living, is to help others, his ultimate good requires that others shall be in want. His happiness is the obverse of their misery. If he wishes to help “humanity,” the whole of humanity must be in need. The humanitarian wishes to be a prime mover in the lives of others. He cannot admit either the divine or the natural order, by which men have the power to help themselves. The humanitarian puts himself in the place of God.
But he is confronted by two awkward facts; first, that the competent do not need his assistance; and second, that the majority of people, if unperverted, positively do not want to be “done good” by the humanitarian. When it is said that everyone should live primarily for others, what is the specific course to be pursued? Is each person to do exactly what any other person wants him to do, without limits or reservations? and only what others want him to do? What if various persons make conflicting demands? The scheme is impracticable.
Perhaps then he is to do only what is actually “good” for others. But will those others know what is good for them? No, that is ruled out by the same difficulty. Then shall A do what he thinks is good for B, and B do what he thinks is good for A? Or shall A accept only what he thinks is good for B, and vice versa? But that is absurd. Of course what the humanitarian actually proposes is that he shall do what he thinks is good for everybody. It is at this point that the humanitarian sets up the guillotine.
What kind of world does the humanitarian contemplate as affording him full scope? It could only be a world filled with breadlines and hospitals, in which nobody retained the natural power of a human being to help himself or to resist having things done to him. And that is precisely the world that the humanitarian arranges when he gets his way.
When a humanitarian wishes to see to it that everyone has a quart of milk, it is evident that he hasn’t got the milk, and cannot produce it himself, or why should he be merely wishing? Further, if he did have a sufficient quantity of milk to bestow a quart on everyone, as long as his proposed beneficiaries can and do produce milk for themselves, they would say no, thank you. Then how is the humanitarian to contrive that he shall have all the milk to distribute, and that everyone else shall be in want of milk?
There is only one way, and that is by the use of the political power in its fullest extension. Hence the humanitarian feels the utmost gratification when he visits or hears of a country in which everyone is restricted to ration cards. Where subsistence is doled out, the desideratum has been achieved, of general want and a superior power to “relieve” it. The humanitarian in theory is the terrorist in action.
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That’s awesome.
I like humanitarians who really are what they say they are. The true humanitarian knows that, in general, people are happiest when they take care of themselves and their families, and when they contribute voluntarily (not under government coercion) to those less fortunate. The true humanitarian leaves others to live their lives, and willingly pitches in to help those who who honestly need help.
The fellow who wants others to suffer heavy taxation, ration cards, and health-care lines on the grounds of “access,” “equity” or any other justification isn’t really a humanitarian at all. He’s a sadist.
[...] some heavy reading to do over your morning coffee. I found it over at Electric City Weblog during a discussion of a recent popular topic- Universal in-some-manner Health [...]
Rob – you and Charles Dickens.
[...] to nationalized healthcare. In a few weeks, he claimed that Medicare and other federal programs ruined the finest, least expensive healthcare system in the world and took away $15 housecalls, that national healthcare violate would violate the [...]
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Great post, thanks for the info
How about now, two years later, what do we think about health reform