Deadly Spin (11 page)

All five efforts emerged from different political circumstances. But if all five were recast as
Law & Order
or
CSI: Miami
episodes, despite there being five different victims, five different sets of fingerprints, and five different murder weapons left at the scene, the motive would be the same. And the only possible conclusion would be that they were all “done in” by the same “perp”: America’s free-market health care system, which walked away scot-free each time.

Because it was the first victim, the AALL effort is worthy of study. In short, the group comprised about three thousand reform-minded members, mostly upper- or upper-middle-class leaders in their communities or regions, giving AALL considerable influence. As an “elitist organization,” AALL was anything but liberal. In fact, most of its members were vigorous opponents of Eugene Debs, leader of the Socialist Party, who was on a tear at the moment. AALL members sought to neutralize these Socialist Party inroads by using “scientific methods” to aid the working classes while also eliminating the abuses of capitalism—loosely imitating the earlier conservative, nationalistic European successes.
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As part of the Progressive Era, and enlightened by their own pragmatic backgrounds, AALL members recognized from the outset that the strongly decentralized government of the United States required an approach radically different from the social welfare systems in Europe. It would be more difficult to install as well, because all programs would have to be legislated at state and local levels rather than at the federal level, as on the other side of the Atlantic. President Wilson’s general opposition to any federalized social legislation further mandated this route.

The first national AALL campaign was for states to legislate that employers form government-run pools to insure their workers against industrial accidents—providing “workmen’s compensation.” This campaign met with very little resistance and a great deal of enthusiasm. Thirty-three states eventually passed such laws. Encouraged and inspired by this and other local successes (and even buoyed by Roosevelt’s impact on the 1912 election), AALL upped the ante and set its sights on its major Progressive goal: government health care at state levels in America.
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An AALL national conference in 1913 eventually led to formal input from the AMA, and in 1914 the two groups formed an actual partnership of sorts that led to the drafting in 1915 of a bill that was thought to be acceptable to all. Limited to the working classes, the proposed bill would have provided coverage for physicians, nurses, and hospitals, plus sick pay, maternity benefits, and a fifty-dollar death benefit for burial costs. Hopes were at their highest.

But 1917 saw the house of cards come tumbling down. Big labor, spearheaded by Samuel Gompers, denounced compulsory health insurance as an unnecessary, paternalistic reform. State and local medical societies objected to the AMA’s support of the legislation, which led to the national group’s denying that it had ever sponsored it in the first place. And—surprise, surprise—also joining the opposition were the for-profit life insurance companies, which vociferously objected to the legislation’s “intrusion” into their market, despite the fact that none of them offered health insurance.

This sudden, unforeseen groundswell of opposition probably would have been enough. But another major event, the U.S. entry into World War I in April 1917, engulfed the entire debate in a fierce anti-German fever. Opponents labeled the effort “un-American” and the “Prussian menace” and claimed it was part of a plot designed by German dictator Kaiser Wilhelm II “the same year he started plotting and preparing to conquer the world.” Prudential Insurance executive Frederick Hoffman called the reformers’ proposal for a European-like compulsory insurance program a “German plot.”
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California was the only state to go ahead with a public referendum, in 1918, but it was vigorously opposed by the state’s physicians, who were joined by the major life insurers’ group, led by Prudential and Metropolitan, and the Pharmaceutical Manufacturers’ Association, which financed a campaign to galvanize public opposition.

The referendum became the first overt effort by special interests in the United States to defeat health care by using propaganda—and by then the Russian Revolution had occurred, so the by-now-familiar epithets “Bolshevik” and “Communist” joined “Hun” and “Prussian” in pamphlets as descriptions of people who supported the plan, which lost overwhelmingly at the ballot box.

THE FREE-MARKET “SOLUTION” CONTINUES

The Red scare continued after the end of the war and brought public hysteria to new levels in America. Triggered by a wave of inflation, a series of violent labor strikes, race riots, lynchings, and other forms of vigilante justice, the United States entered a period of political unrest that changed little throughout the 1920s. In this panicky climate, further proposals for “socialist” public health care reform simply did not happen.

Free-market, prepaid health insurance began creeping into existence, though, with the introduction of company group plans, like one offered by Montgomery Ward & Company in 1910, and labor union plans, like one offered by the International Ladies Garment Workers Union in 1913. Such plans covered less than 2 percent of the workforce by 1929, when the nation’s first real public prepaid-hospitalization plan was unveiled in Dallas.

The focus of the plan was narrow, specifically a single institution—the nonprofit Baylor University Hospital—where the administrator, Dr. Justin Ford Kimball, devised a strategy to deal with the hospital’s mounting expenses. His idea was to have groups of local residents, beginning with Dallas teachers, pay fifty cents a month and receive up to twenty-one days of hospital care—if needed—during any year. Called the Kimball Plan, it made everybody happy, subscribers and cash-strapped hospital officials alike. Other nonprofit hospitals quickly began mimicking it, but all these early plans mandated that enrollees use only the hospital initiating each scheme.

“Free choice” plans that allowed subscribers to choose their own “participating” nonprofit hospital when ill soon began popping up. Some of these plans were killed quickly in states that saw this as selling insurance without a license, infringing on the free market. But this, in turn, prompted the American Hospital Association to lobby states to permit the sale of hospital insurance by nonprofit corporations, like hospitals—an idea approved first in New York in 1934 and then by thirty-five other states during the next eleven years.

Eventually, these tax-exempt efforts were united under a common name, Blue Cross, and a common trade group, the Blue Cross Association (later renamed the Blue Cross and Blue Shield Association),
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which by 1945 had about two thirds of the nation’s health insurance market locked up, in what undoubtedly is by far the biggest consumer-driven success story in America’s history of open-market health insurance. The fact that it was accomplished by government-shielded nonprofits doesn’t deter today’s talking point propagandists from extolling its “free-market” approach.

Unfortunately, in 1929 something bigger than the birth of what would become Blue Cross also happened: the Wall Street crash and the Great Depression.

Although serious health care issues went unaddressed at any political level in the 1920s, the process of thinking about them didn’t stop. A productive result was the Committee on the Costs of Medical Care, founded in 1927 and led by Dr. Ray Lyman Wilbur (president of Stanford University, a former AMA president, and a future secretary of the interior) to attempt the first-ever serious study of U.S. health care and how to change or improve it.

Made up of fifty high-level economists, physicians, and public health specialists, the CCMC, in a report it released before disbanding in 1932, called for far-reaching changes in the organization and financing of American medicine, although stopping short of asking for compulsory insurance. Its primary recommendations were for medical practices to organize with hospitals as their focus rather than solo practitioners; for public health services to be extended; for group payment for medical care to be established through taxation, private health insurance, or both; and for there to be large-scale planning for and coordination of the nation’s health services.

Although these proposals may seem rather reasonable and tame—even conservative—in today’s world, they were deemed totally unacceptable by a majority of physicians at the time. The AMA, now ever vigilant, denounced them as “an incitement to revolution.” Other health providers attacked them as an attempt to “institutionalize” and, of course, “socialize” American medicine, which up to that point had been a highly individualistic, largely self-regulated affair. Instead of illuminating a well-reasoned path to the future, the CCMC’s 1932 report helped underscore the sharp divide between doctors and the rest of society that still echoes today.
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It was into this cauldron that Franklin Roosevelt tumbled that year by being elected president to deal with the greatest economic crash in the nation’s history. A quarter of the population was unemployed, banks were collapsing, industries were bankrupt, there was panic in the streets, and Roosevelt assumed a national presidency that gave him little executive power to do much but watch the suffering. Understandably (and supported by everyone but the radical right), Roosevelt immediately began legislating ways to obtain and centralize the executive power needed for someone in his position to deal with these staggering issues. Also understandably, health care just wasn’t on that list—yet.

SOCIAL SECURITY, YES; HEALTH CARE, NO

The first two years of Roosevelt’s New Deal were a whirlwind of activity that led to the establishment of a great many agencies to combat the depression, many of them stopgap or emergency measures but all of them reflective of a never-before-seen level of executive energy coming from an extremely activist central government. Coupled with his Fireside Chats over the radio, Roosevelt’s actions served to lift America’s spirits, while changing the very nature of government and public policy. Eventually, during one of his famous chats, he said, “One of the duties of the state is that of caring for those of its citizens who find themselves the victims of such adverse circumstances as makes them unable to obtain even the necessities for mere existence without the aid of others. That responsibility is recognized by every civilized nation … To these unfortunate citizens aid must be extended by government—not as a matter of charity but as a matter of social duty.”

It was in this vein—citing the vast inadequacies of state-run programs—that Roosevelt appointed a Committee on Economic Security (CES) in June 1934. Chaired by Secretary of Labor Frances Perkins, it was to study all forms of national “social insurance” and to make recommendations by the end of the year. Although Roosevelt said in a June 8 address to Congress that he was particularly interested in old-age and unemployment insurance, he opened the door for explorations of accident insurance, retirement annuities, survivor’s insurance, family endowments, maternity benefits, crop insurance—and health insurance.

The AMA again mobilized at once, eventually calling an emergency meeting of its House of Delegates (only the second in its history), which denounced any effort to “socialize” medicine by establishing prepayment plans and taking health care decisions out of the hands of physicians. The siege had begun, with AMA members and staff bombarding members of Congress with letters, postcards, and phone calls decrying any form of compulsory health insurance. Edwin Witte, executive director of the CES, recalled that the committee was “at once subjected to misrepresentation and vilification.”
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The pressure continued unabated, publicly and privately, for a year—and included the president’s own personal physician lobbying Eleanor Roosevelt.
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The president responded by appointing physicians to the CES and seeking a middle ground that would be acceptable—but the AMA would have none of it, and the pressure continued until an evening in June 1935, when Roosevelt privately concluded to his administration that it should proceed with a Social Security bill on its own merits, not risking its defeat by including health care provisions.

For the next seventy-five years, scholars would debate whether the president was unduly cautious about health insurance. But all sides agree that the decision was Roosevelt’s alone—and no one will ever know what would have happened had he committed to battling personally for health insurance in the overall Social Security Act, which he signed into law on August 14, 1935—a major milestone for the nation on its own. The victory was so huge, in fact, that Roosevelt’s administration was consumed with other political battles spawned during its enactment period. This and other depression-era legislation—coupled with the rise of Blue Cross–type insurance for companies and their workers (eventually endorsed by the AMA)—placed public health care on the back burner again.

In July 1938, a National Health Conference was held in Washington to bring together (some say for the first time ever) all the disparate interest groups—including doctors, unions, farmers, and civic leaders—to discuss the health needs of the nation at that point. The conference concluded with a series of recommendations that featured increased public health services in general, aid for the medically indigent, grants-in-aid for hospital construction, and grants to states to encourage (but not compel) statewide health insurance plans.

The AMA called another emergency session of its House of Delegates—but this time it adopted a more conciliatory position, opposing only any language that might result in compulsory insurance. Several discussions on the matter ensued at the White House before Roosevelt abandoned the issue for that election year—which turned out to be prophetic. A conservative resurgence at the 1938 polls, led by Dixiecrats and Republicans, made things “righter” in Washington and effectively put an end to New Deal legislation.
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