50 years After Medicare: Healthcare Built in the Land of Capitalism

President Johnson created a system to care for the underserved. In doing so, he inadvertently contributed to a 3000% rise in hospital administrators.


Last month marked the 50th anniversary of President Johnson’s signing the Social Security legislation that established Medicare and Medicaid. A recent NPR segment recounted how this divided the country. On the right, sponsored by the American MedicalAssociation, Ronald Reagan took to the airwaves suggesting the legislation was part of the slide to socialism. On the left,many saw the efforts as an extension of the Civil Rights Act, an opportunity to give many Americans what they had, until then, never had—access to medical care. Now, with the passage (and continued rancor) of the Affordable Care Act (ACA), it is worth reflecting on the last fifty years of history, on what happened to the country, and on what the legislation means to supporters and detractors.

What Didn’t Happen with the Adoption of Medicare

The sky didn’t fall and doctors didn’t become governmental pawns.

Before the legislation many of the poor and elderly in America fell back on on the charity of others. After the legislation, these services became reimbursable and, in fact, physicians saw large gains in their incomes. On average, reimbursement for these programs has risen by an average of over 13% year over year.

medicareSimilar discussions are occurring now. Many physicians dread the intrusion of more government into their domain. However, others believe that with a requirement for all Americans to pay something for care, there will be additional dollars for what is now often uncompensated work.

What Did Happen with the Adoption of Medicare

With government comes bureaucracy.

Although the improved life expectancy and access to care for many of the underserved are measurable gains, there is no question that government expansion has resulted in a bloated bureaucracy, at times with no measurable benefits. According to the Bureau of Labor Statistics there has been a 3000% growth in the number of hospital administrators since the 1970s. This compares to a relatively meager expansion of the number of physicians in the same time period. One has to presume these administrators were brought on to “administer” all of the rules and regulations that come with government- (and by extension, insurance-) related activities. Many physicians note they spend more of their time documenting rather than caring for their patients. The new and improved ICD-10 bill codes do not promise relief. Notably, America now spends almost twice what other developed countries spend on healthcare, for results that are measurably lower than countries with medical systemIMG_4412s that have considerably more government intervention. I have wondered if it’s our rather schizophrenic approach—a firm belief in capitalistic forces within the context of a business that follows bizarre business rules (like, if you can’t pay, no problem)—that has led to this surprising outcome.

Where do You Stand on Medicare and Medicaid?

It is interesting to talk with patients and providers about their feelings regarding American healthcare. Most Americans view healthcare as a right, something they shouldn’t have to pay for. This of course is not the case. We pay for healthcare all the time: through our taxes and through our paychecks. It consumes a larger percentage of the GDP than any other sector. Perhaps this is why, when we need healthcare, we presume we’ve already paid for it and are surprised to receive a bill for services rendered.

When it comes to Medicaid, feelings run even stronger. That a certain percentage of the poor still pay nothing for healthcare rankles many Americans. However, I’d rather give than receive any time. I’d rather pay for a stranger’s lung cancer treatment than have lung cancer myself.

And when it comes to benefits in general, some argue that personal responsibility should play a larger role, that, for example, smokers should be responsible for their own health, knowing that their habit puts them at risk for heart disease and cancer. This approach to health care is, however, a slippery slope. Where does it stop? If you don’t eat well? If you don’t exercise? If you go skiing and you hit a tree? When it comes to determining benefits, exactly which types of activities or habits fall under the umbrella of personal responsibility?

Given the complexity and variety of scenarios, it might be better to consider governmental healthcare in the context of a business case. Although none of us likes to pay for healthcare, it is likely more cost-effective to provide services for the poor before they’re forced to resort to a hospital emergency room. And it is decidedly preferable to provide preventive care rather than wait until they’re severely ill. Unless we’re willing to turn people away from hospitals and emergency rooms, these are unavoidable costs—as at least some politicians are brave enough to acknowledge. In the recent Republican presidential debate, Gov. Kasich from Ohio gave an impassioned and succinct explanation as to why he took federal dollars for Medicaid, often a sticking point for Republican administrations. He saw the money as simply a cheaper and better alternative, especially compared to (in one example) imprisoning those citizens who suffer with behavioral health and addiction issues.

Medicare, Capitalism, and the Future of American Healthcare

Healthcare can be seen as an expression of a particular country’s cultural biases. For Americans, capitalism is the bedrock bias supporting much of what we do at work, at play, at home. As such, its ethos is infused into the care provided in this country. However, the capitalistic approach oftentimes does not provide the most cost-effective solution for the citizenry.

My expectation is that we will continue to build a two-tiered system—one where those above a certain income level pay with money and those below it pay with increased time spent accessing care. Many Americans will object to differential care, but this is already happening today. Although admittedly bloated and imperfect, the Medicare / Medicaid legislation in 1965, and to some degree it’s extension in the Affordable Care Act, is an effort to provide care in the context of a capitalistic society.

I often have lunch with other physicians. With the ever increasing bureaucracy and lost of independence, complaints about medicine are common. But when asked for alternatives, “not government” is not an answer. Things are not black-and-white. Personal responsibility should factor into healthcare. At the same time, the greatest nation on earth should provide some level of a safety net. So I ask you, where do you sit on this issue? Do you support government providing care for the underserved? If not, what other solutions can you suggest?

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