Back to Table of Contents | March 2010

Clinical and Health Affairs

A Short History of Health Care Reform

Minnesota Medicine’s Perspective, 1934-1967

By Peter J. Kernahan, M.D.

Abstract
From 1934 through 1967, Minnesota Medicine published a section called Medical Economics. The editors used the section to address the politics and economics of health care and health insurance by excerpting news items, reprinting opinion pieces, and contributing original material to inform and influence the readership. This article reviews the history of health care reform and organized medicine’s response to it as reflected in this section of the journal.

The medical profession has its chance NOW in America to tackle and solve the problem of providing under its own leadership, adequate care in sickness and adequate instruction in disease prevention under its own direction for the great mass of its people.

—the editors, Minnesota Medicine, 1934

With this call to action in its April 1934 issue, Minnesota Medicine introduced a new section called Medical Economics.¹ Established at the request of the Council of the Minnesota State Medical Association (MSMA) and edited by the MSMA’s Committee on Economics, the section would address the many social and economic challenges facing medicine. That year, physicians were continuing to feel the financial effects of the Great Depression despite some improvement in the economy. As the editors noted in their first column, the tentative signs of recovery had not eliminated the challenges facing the profession. “If the post-depression outlook for medical practice is rosier, it is because a little cash in the hands of the hard-pressed medical profession will perhaps free it for more careful consideration of these post-depression dilemmas, all of which are well supplied with horns on which to hoist and destroy the unwary.” The dilemmas they went on to describe included the problem of returning patients from free clinics to their family physicians; the problem presented by the “man with small means” who is burdened with the expense of medical and hospital care during times of serious illness; the problem of increasing reliance on government; and the problem of industrial insurance and compensation. The possibility that the federal government might try to resolve some of these concerns through compulsory health insurance worried physicians in Minnesota and throughout the country. Thus, Medical Economics began in a time of crisis.

For the next 30 years, the section would address the politics and economics of health care. By excerpting news items, reprinting opinion pieces, and contributing original materials, the editors sought to inform and influence their readership. This article reviews the early history of health care reform and organized medicine’s response as seen though the Medical Economics section of Minnesota Medicine. It pays particular attention to the precedent-setting debates of the 1930s.

State Insurance and Social Security

Discussion of government-sponsored health insurance began long before the Medical Economics section first appeared in Minnesota Medicine. Following the introduction of state insurance plans for industrial workers in Germany and Britain by the turn of the 20th century, American social reformers began lobbying at the state level for similar programs in the United States. The American Association for Labor Legislation (AALL), founded by a group of progressive economists at the University of Wisconsin, led those efforts. By 1915, after waging successful campaigns for state workman’s compensation laws, leaders of AALL had drafted model legislation for health insurance for industrial workers based on European precedents. Until repudiated by the House of Delegates in 1920, some officials of the American Medical Association (AMA) had even offered their support to AALL’s efforts.² Although several legislatures considered these bills, no state adopted them. The anti-German atmosphere of World War 1 and the post-war conservative political mood effectively ended these early attempts at state-run health insurance.

By the late 1920s—amid concerns about the rising cost and affordability of medical care, the decline of the general practitioner, too many specialists, and the expense of new technology—the Milbank Foundation, a private philanthropic organization, convened a Committee on the Costs of Medical Care (CCMC) composed of academics, social reformers, and representatives from the medical profession to study health care in the United States. The committee—several members of which had ties to the former AALL—recommended that medical services be reorganized around group practices and regional hospitals coordinated by community and state agencies and that insurance coverage be provided to cover medical costs and lost wages for those of moderate means. The AMA’s representatives on the committee dissented in a strongly worded minority report. When President Franklin Delano Roosevelt took office in 1933, several of the CCMC’s principals joined the new administration.

Consequently, when FDR established the Committee on Economic Security in June of 1934 to develop social security legislation, organized medicine had every reason to believe that compulsory health insurance would be included in any bill sent to Congress. Leaders of medical organizations including the MSMA believed that compulsory insurance, or perhaps any insurance plan, threatened the profession’s ability to control its own affairs.³ Despite the later reputation of “organized medicine” as a powerful political force, the ascent of the AMA and the subsidiary state medical societies was, in 1930, a relatively recent development. Historical experience as well as self-interest underlay organized medicine’s anxiety about control of the profession.

In 1900, the 50-year-old AMA had been a small, almost regional organization based in Chicago with a membership of 8,400. At the time, the medical profession as a whole was divided, overcrowded, and fractious, and many physicians had been inadequately educated. As late as the 1910s, for example, graduates of schools such as Baltimore’s Atlantic Medical College and Maryland Medical College—described by medical reformer Abraham Flexner in his eponymous report as “unconscionable concerns”⁴—still entered the medical marketplace along with those of top-tier schools such as Johns Hopkins and the universities of Minnesota and Michigan. By 1920, under a series of strong leaders, the AMA had become a national organization of 83,338 members (slightly less than 60% of all physicians) determined to reform medical education, unify the profession, limit physician numbers, and protect the interests of its members.⁵ The leadership of both the national and state medical associations, dominated by the more successful and the better-trained members of the profession, had no desire to go backward.

One of organized medicine’s great fears was that “state medicine” would do exactly that by exploiting weaknesses within the profession. The first editors of Medical Economics—all of whom were successful specialists (see box)—reflected those concerns in their columns. Nationally, the effects of the decrease in the number of medical schools that followed Flexner's report had yet to be felt. And a significant number of poorly trained physicians remained, often in marginal practices—a reserve army presumably willing to accept whatever fees and conditions the “state” would offer. Noting that in Chicago the “best men” did not accept patients on municipal relief (welfare), the editors warned in January of 1935 that under state medicine, “the poorest men will do most of the work.”⁶ In their view, the state would choose the lowest bidder, regardless of quality. The editors went on to ask, “can we get the 40,000 who represent the lower third of medicine, so far as income goes, to sink their individual desires for the sake of the profession?” They called for “evangelical work … to carry by word of mouth to that lower third the real aims of our organization.” (Less charitable readers might have considered this a call for coercion and intimidation and an attempt to preserve the incomes of the successful.) Thus, the editors presented the fight against state medicine as a fight to preserve the quality of medical care.

They frequently cited European examples to demonstrate the deleterious effect of state control on quality. There, many individual practitioners were underpaid, overworked, and unable to control their practices. Even a review of A.J. Cronin’s best-selling medical novel The Citadel could be cited as evidence of the degraded position of the physician under state medicine.⁷ Further, the editors believed that political corruption would make any system in the U.S. even worse.⁸ They had reasonable grounds for concern given the role of politics in appointments at municipal hospitals and the history of the Veteran’s Bureau under the scandal-prone Harding administration.⁹ Corruption, machine politics, and the spoils system remained a feature of political life in all levels of government.

Adding to organized medicine’s anxiety was the fact that the unity of the medical profession appeared to be threatened by the debate over health insurance. Breaking with the AMA, the American College of Surgeons (ACS) had publicly endorsed and supported prepayment plans for medical services. Franklin Martin, M.D., the college’s mercurial director-general and no friend of the AMA, made several trips to Washington. To the consternation of the AMA, he left administration officials with the impression that the college supported a compulsory insurance provision within any social security legislation. “So long as the Federal government consults and ‘cooperates’ with groups that truly represent the medical profession,” the editors wrote in a rebuke to the ACS, “precipitate action which will endanger permanent progress in care of the sick need not be feared.”¹⁰ Unity meant strength, and strength required a single voice in Washington.

Martin, the only major medical leader who supported compulsory insurance, died in February of 1935. That same month, the editors of Medical Economics noted that an ACS official, during a recent visit to St. Paul emphasized that the college had only wished to lay out general principles of insurance and that an improving economy would mean less talk of any radical change.¹¹ Nationally, too, ACS leaders mended fences with the AMA and agreed to “leave the solution of economic problems to organized medicine.”¹² They informed FDR in July of 1935 that the “impression that the American College of Surgeons favors compulsory health insurance is a misapprehension.”¹³ But by then the social security bill had already been sent to Congress without a health insurance provision. For the next 30 or 40 years, the ACS and the specialty societies would defer to the AMA on socioeconomic matters. The AMA and the state societies such as the MSMA had indeed become the voice of organized medicine.

The National Health Program and Medicare

Washington, however, did not abandon the idea of national health insurance after 1935. Work on medical economics continued within the Roosevelt administration culminating in a National Health Program (NHP) that was sent to Congress for study in 1939. Drawing from the NHP, Sen. Robert Wagner (D-New York) made two attempts at health insurance legislation in 1939 and 1943. In 1945, with strong support from President Harry Truman, Wagner together with Sen. James Murray (D-Montana) and Rep. John Dingell (D-Michigan) introduced a third health insurance bill, precipitating a bruising public battle with the AMA.

Unlike the relatively factual style used in 1934 and ’35, the writings in Medical Economics now took on a much more overt ideological tone. In November of 1943, for example, the editor noted that he had reprinted a speech by a national business leader “for the benefit of physicians who may forget that the threat to medicine is only one phase of the overall danger [to the American free-enterprise system].”¹⁴ “The battle for the preservation of the American System of Medicine,” the editor warned in 1946, “grows ever more involved.”¹⁵ What had been in 1934 and ’35 a debate over the best way to provide medical services became, in the context of the second World War and the ensuing Cold War, part of a larger contest between freedom and socialism, between the American and the alien.

The editors of the Medical Economics section remained alert to the threat of socialized medicine throughout the 1950s and early ’60s. Published materials citing the failures and weaknesses of Britain’s National Health Service appeared as regular warnings to the complacent. When the debates over federal health insurance for seniors (Medicare) began in 1963, Medical Economics reprinted the AMA president's address to the MMA at its annual meeting that year: “Fedicare or Freedom.” The editor admonished all physicians to read the text “because of the importance of Dr. Fister’s remarks,” which defended the AMA from charges of inaction, supported voluntary rather than compulsory insurance plans, and framed the debate as “the fight for freedom … for the voluntary way and the free enterprise system.”¹⁶ In early 1965, the AMA proposed an alternative bill, Eldercare, endorsed by the editors of Medical Economics as “superior in all respects to King-Anderson (Medicare).”¹⁷ Eldercare would have operated under state administration through Blue Cross or other insurers with federal subsidies provided to individuals based on need. Medicare in its final form—Part A (hospital services) and Part B (physician services)—passed both houses of Congress in July of 1965.

Conclusion

The focus of Medical Economics changed following the passage of Medicare. Increasingly, it addressed personal finance and office management.¹⁸ The introduction of a new section, variously titled “It’s the Law” or “Law and Medicine,” suggested that physicians faced new challenges. Without fanfare, Medical Economics disappeared at the end of 1967. It was missed by some. In January of 1976, Minnesota Medicine editor Richard Reece, M.D., reassured readers that the journal still welcomed socioeconomic articles and pointed to several in that issue.¹⁹ He simply asked that they avoid the “blatantly partisan, strident, or opinionated”—a requirement that on more than one occasion the editors of the Medical Economics section might not have met. With the end of Medical Economics, Minnesota Medicine would no longer have a regular and authorized section devoted to socioeconomic matters. The journal, however, has continued to inform its readers about state and national health care issues, and it invites informed opinion from all sides. MM

Peter Kernahan is a Ph.D. candidate in the program in the history of medicine and an adjunct instructor in the department of surgery at the University of Minnesota. He is a member of Minnesota Medicine’s editorial advisory committee.
 

References
1. Medical Economics. Minnesota Medicine. 1934;17(4):207 (emphasis in original).
2. Numbers R. Almost Persuaded: American Physicians and Compulsory Health Insurance, 1912-1920. Baltimore, MD: Johns Hopkins University Press, 1978.
3. Shall We Be Lay-Dominated? Minn Med. 1934;17(11):663.
4. Flexner A. Medical Education in the United States and Canada. Carnegie Foundation Bulletin No. 4. 1910:238
5. Burrow JG. AMA: The Voice of American Medicine. Baltimore, MD: Johns Hopkins University Press, 1963:49.
6. What About the Lower Third. Minn Med. 1935;18(1):40.
7. Medical Economics. Minn Med. 1937;20(11):814.
8. The New Despotism. Minn Med. 1938;21(12):864-5.
9. Stevens R. Can the government govern? Lessons from the formation of the Veterans Administration. J Health Polit Policy Law. 1991;16(2):281-305.
10. Report of the president. Minn Med. 1935;18(2):114 (emphasis added).
11. As to health insurance. Minn Med. 1935;18(2):115.
12. College of Surgeons conforms. Minn Med. 1935;18(7):469.
13. Letter from George Crile to Franklin Roosevelt 7/1/1935. Crile, Dr. George W Folder. Box 3. Corrigan, Francis P Collection. Papers of Franklin Roosevelt. Franklin D. Roosevelt Library, Hyde Park, New York
14. A threat to freedom. Minn Med. 1943;26(11):1001.
15. Battle for control of medicine grows ever more important. Minn Med. 1946;29(11):1152.
16. Fedicare or freedom. Minn Med. 1963;46(7):709-715.
17. Medical Economics. Minn Med. 1965;48(3):401-5.
18. Your bank account. Minn Med. 1967;50(1):142.
19. Reese RL. Social and economic articles. Minn Med. 1976;59(1):7-8.