BOOK TWO / THE STRUGGLE FOR MEDICAL CARE

Chapter One

The Mirage of Reform

1. I. M. Rubinow, Social Insurance (New York: Henry Holt, 1916), 224–50.

2. Gaston V. Rimlinger, Welfare Policy and Industrialization in Europe, America and Russia (New York: Wiley, 1971), Chaps. 2 and 3.

3. Reinhard Bendix, Nation-Building and Citizenship (New York: Wiley, 1971), 80–101.

4. Rimlinger, Welfare Policy and Industrialization; Peter Flora et al., “On the Development of the Western European Welfare States.” (Paper prepared for the International Political Science Association, Edinburgh, August 16–21, 1976).

5. Rimlinger, Welfare Policy and Industrialization, 110–12.

6. Bentley B. Gilbert, British Social Policy, 1914–1939 (London: Batsford, 1970), 15. See also Gilbert’s earlier book, The Evolution of National Insurance in Great Britain (London: Michael Joseph, 1966), Chaps. 6 and 7.

7. Gilbert, Evolution of National Insurance, 165–67; Rubinow, Social Insurance, 226.

8. Charles R. Henderson, Industrial Insurance in the United States (Chicago: University of Chicago Press, 1909), 112–27; Edgar Sydenstricker, “Existing Agencies for Health Insurance in the United States,” in U.S. Department of Labor, Proceedings of the Conference on Social Insurance, 1916 (Washington, D.C.: U.S. Government Printing Office, 1917), 430–75.

9. James B. Kennedy, Beneficiary Features of American Trade Unions (Baltimore: Johns Hopkins University Studies in Historical and Political Science, 1908); Twenty-Third Annual Report of the Commissioner of Labor 1908 (Washington, D.C.: U.S. Government Printing Office, 1909), 28–30, 205–13.

10. Edwin J. Faulkner, Health Insurance (New York: McGraw-Hill, 1960), Chap. 16; Rubinow, Social Insurance, 295–96.

11. John F. Dryden, Addresses and Papers on Life Insurance and Other Subjects (Newark, N.J.: Prudential Press, 1909), 31–32.

12. Report of the Health Insurance Commission of Illinois, (n.p.: May 1, 1919), 108 [henceforth referred to “Illinois commission report”]; Ohio Health and Old Age Insurance Commission, Health, Health Insurance, Old Age Pensions (Columbus, Ohio, 1919), 156 [henceforth referred to as “Ohio commission report”]; Report of the Social Insurance Commission of the State of California, March 1919 (Sacramento: California State Printing Office, 1919), 11. For two earlier overviews, see Rubinow, Social Insurance, 281–98 and Sydenstricker, “Existing Agencies for Health Insurance,” esp. 431–36.

13. Rubinow, Social Insurance, 296, 419–20; Marquis James, The Metropolitan Life: A Study in Business Growth (New York: Viking, 1947), 73–93.

14. On the background of the AALL, see Irwin Yellowitz, Labor and the Progressive Movement in New York State, 1897–1916 (Ithaca, N.Y.: Cornell University Press, 1965), 55–59; John R. Commons and A. J. Altmeyer, “The Health Insurance Movement in the United States,” in Ohio commission report, 291–92; and Roy Lubove, The Struggle for Social Security, 1900–1935 (Cambridge: Harvard University Press, 1970).

15. For the association’s model bill, see American Labor Legislation Review 6 (June 1916), 239–68.

16. Yellowitz, Labor and the Progressive Movement, 85.

17. Illinois commission report, 15–17; Rubinow, Social Insurance, 214.

18. Illinois commission report, 15, 18.

19. Ibid., 20–22. The New York Charity Organization Society found three fourths of a sample of five thousand charity cases were caused by sickness. See Hace Sorel Tishler, Self-Reliance and Social Security, 1870–1917 (Port Washington, N.Y.: Kennikat Press, 1971), 164.

20. Rubinow, Social Insurance, 298. On Rubinow’s general political views and career, see J. Lee Kreader, “Isaac Max Rubinow: Pioneering Specialist in Social Insurance,” Social Service Review 50 (September 1976), 402–25.

21. Irving Fisher, “The Need for Health Insurance,” American Labor Legislation Review 7 (March 1917), 23.

22. B. S. Warren and Edgar Sydenstricker, “Health Insurance: Its Relation to Public Health,” Public Health Bulletin, no. 76 (March 1916), 6.

23. Ibid., 54.

24. I. M. Rubinow, “Social Insurance” (Chicago: American Medical Association, 1916), 24.

25. Ohio commission report, 136.

26. Ronald L. Numbers, Almost Persuaded: American Physicians and Compulsory Health Insurance (Baltimore: Johns Hopkins University Press, 1978) and Tishler, Self-Reliance and Social Security, 167–70. I owe a considerable debt to both these studies in this discussion.

27. Numbers, Almost Persuaded, 34.

28. Warren and Sydenstricker, “Health Insurance”; “Report of the Standing Committee Adopted by the Conference of State and Territorial Health Authorities with the United States Public Health Service, Washington, D.C., May 13, 1916,” Public Health Reports 31 (July 21, 1916), 1919–25; Alexander Lambert, “Organization of Medical Benefits Under the Proposed Sickness (Health) Insurance System,” in U.S. Department of Labor, Proceedings of the Conference on Social Insurance, 1916, 651–53.

29. Michael M. Davis, Jr., to John B. Andrews, July 21, 1915, in Papers of the American Association for Labor Legislation, 1905–1945 (Glen Rock, N.J.: Microfilm Corporation of America, 1973), reel 14.

30. Lambert, “Organization of Medical Benefits,” 655–59.

31. Numbers, Almost Persuaded, 50–51.

32. American Labor Legislation Review 7 (March 1917), 51–65; Numbers, Almost Persuaded, 84.

33. U.S. Congress, House Committee on Labor, Hearings Before the Committee on H.J. Resolution 159 . . . April 6 and 11, 1916, 64th Cong., 1st sess., 36–45, 122–89.

34. Marc Karson, American Labor Unions and Politics, 1900–1918 (Carbondale, Ill.: Southern Illinois University Press, 1958).

35. Selig Perlman, A Theory of the Labor Movement (New York: Macmillan, 1928), 162.

36. Nathan Fine, Labor and Farmer Parties in the United States, 1828–1928 (New York: Rand School of Social Science, 1928), 129.

37. Bernard Mandel, Samuel Gompers (Yellow Springs, Oh.: Antioch Press, 1963), 32.

38. Ibid., 183; see also Samuel Gompers, “Trade Union Health Insurance,” American Federationist 23 (November 1916), 1072–74; Philip Taft, The A.F. of L. in the Time of Gompers (New York: Harper & Row, 1957), 364–65.

39. Commons and Altmeyer, “Health Insurance Movement,” 300. Gompers’ objections were not insuperable. The New York State Federation supported a bill that would have provided low cash benefits under the compulsory system, thereby leaving room for fraternal and trade union plans to furnish additional cash benefits. Moreover, the German insurance system had stimulated union growth since it provided workers an opportunity to elect representatives.

40. National Association of Manufacturers, Proceedings of the 21st Annual Convention, May 15–17, 1916, 33–38; idem, Proceedings of the 22nd Annual Convention, May 14–16, 1917, 20–21; Frank F. Dresser, “Suggestions Regarding Social Insurance.” (An Address Before the Conference on Social Insurance, Washington, D.C., December 4–9, 1916, NAM Pamphlet 46).

41. National Industrial Conference Board, “Sickness Insurance or Sickness Prevention?” Research Report no. 6 (Boston: National Industrial Conference Board, 1918), and idem, “Is Compulsory Health Insurance Desirable?” Special Report no. 4 (Boston: National Industrial Conference Board, 1919).

42. On the background of the National Civic Federation, see James Weinstein, The Corporate Ideal in the Liberal State: 1900–1918 (Boston: Beacon Press, 1968).

43. Karson, American Labor Unions and Politics; Yellowitz, Labor and the Progressive Movement; Robert Wiebe, Businessmen and Reform (Cambridge: Harvard University Press, 1962), 158–67.

44. Tishler, Self-Reliance and Social Security, 179–89.

45. Ibid.; for a sampler of opinions, see “If Not Compulsory Insurance, What” National Civic Federation Review 4 (June 5, 1919).

46. James, Metropolitan Life, 171–72.

47. Numbers, Almost Persuaded, 78; F. L. Hoffman, Facts and Fallacies of Compulsory Insurance (Newark, N.J.: Prudential Press, 1917).

48. Lee K. Frankel, “Some Fundamental Considerations in Health Insurance,” in U.S. Department of Labor, Proceedings of the Conference on Social Insurance 1916, 598–605.

49. Numbers, Almost Persuaded, 67.

50. Ibid., 73.

51. Ibid., 75–77.

52. League for the Conservation of Public Health, “It Shall Not Pass,” (n.d., n.p.) and letter to doctors, October 8, 1918, Ray Lyman Wilbur papers, Stanford University, Stanford, Calif.

53. Arthur Viseltear, “Compulsory Health Insurance in California, 1915–1918,” Journal of the History of Medicine and the Allied Sciences 24 (April 1969), 151–82; Numbers, Almost Persuaded, 79–81.

54. Lubove, The Struggle for Social Security, 83–84.

55. Illinois commission report, 209.

56. I.M. Rubinow, “Public and Private Interests in Social Insurance,” American Labor Legislation Review 21 (June 1931), 181–91.

57. Even Lubove’s otherwise admirable account in The Struggle for Social Security avoids facing the complexities of the problem by ignoring the AMA’s early approval of health insurance and treating the doctors’ response as an automatic expression of objective interests.

58. Gilbert, Evolution of National Insurance, 425–28.

59. Rimlinger, Welfare Policy and Industrialization, 112–22.

60. Gilbert, Evolution of National Insurance, 356–440.

61. Chester Rowell to Ray Lyman Wilbur, October 7, 1918. Wilbur Papers.

62. Numbers reports that the average income of taxed physicians in Wisconsin rose 41 percent from 1916 to 1919. See Almost Persuaded, 113.

63. Lubove, The Struggle for Social Security, 45–51; see also Lawrence M. Friedman and Jack Ladinsky, “Social Change and the Law of Industrial Accidents,” Columbia Law Review 67 (January 1967), 50–82.

64. I. S. Falk, Security Against Sickness (Garden City, N.Y.: Doubleday, Doran, 1936), 14–16.

65. Michael M. Davis, Jr., preface to Harry A. Millis, Sickness and Insurance (Chicago: University of Chicago Press, 1937), v.

66. Michael M. Davis, Jr., “The American Approach to Health Insurance,” Milbank Memorial Fund Quarterly 12 (July 1934), 214.

67. Milton Friedman and Simon Kuznets, Income from Independent Professional Practice (New York: National Bureau of Economic Research, 1945).

68. Ohio insurance commission, 116.

69. I. S. Falk, C. Rufus Rorem, and Martha D. Ring, The Cost of Medical Care (Chicago: University of Chicago Press, 1933), 89. The estimate was only for private expenditures; figuring in tax money spent on hospital care, the proportion of social expenditures going to hospitals was 23 percent (p. 19).

70. Davis, “American Approach,” 211.

71. Committee on the Costs of Medical Care, Medical Care for the American People (Chicago: University of Chicago Press, 1932), 19.

72. Davis, “American Approach,” 214–15.

73. Sheila M. Rothman, Woman’s Proper Place (New York: Basic Books, 1978), 136–52.

74. Harry H. Moore, American Medicine and the People’s Health (New York: Appleton, 1927), 21.

75. Paul Kellogg to Edward Filene, November 7, 1927. Wilbur papers.

76. CCMC, Medical Care for the American People, Chap. 1. The general summary of findings is presented in Falk, Rorem, and Ring, Cost of Medical Care.

77. CCMC, Medical Care for the American People, 32–36.

78. Roger I. Lee, Lewis Webster Jones, and Barbara Jones, The Fundamentals of Good Medical Care (Chicago: University of Chicago Press, 1933), 12.

79. Ibid.

80. CCMC, Medical Care for the American People, 7.

81. Ibid., 41.

82. “Introduction,” in Falk, Rorem, and Ring, Cost of Medical Care, vi–vii.

83. CCMC, Medical Care for the American People, 61, 128–30.

84. Ibid., 94.

85. Ibid., 68.

86. Ibid., 130–32, 189–201.

87. Ibid., 152–83.

88. “The Committee on the Costs of Medical Care,” JAMA 99 (December 3, 1932), 1950–51.

89. New York Times, November 30, 1932.

90. Averaging the order of enactment of compulsory or subsidized voluntary insurance programs in twelve major European countries, Flora and his associates find that industrial accident insurance ranks 1.7; sickness insurance, 2.2; old-age insurance, 2.7; and unemployment insurance, 3.5. See Flora et al., “On the Development of the Western European Welfare States,” 22.

91. Paul H. Douglas, Social Security in the United States (New York: McGraw-Hill, 1936). 70.

92. Edwin Witte, The Development of the Social Security Act (Madison, Wis.: University of Wisconsin Press, 1962), 174–75. On Witte, see Theron F. Schlabach, Edwin Witte: Cautious Reformer (Madison, Wis.: State Historical Society of Wisconsin, 1969).

93. Abraham Epstein, “Social Security—Fiction or Fact?” The American Mercury 33 (October 1934), 129–38.

94. Witte, Development of the Social Security Act, 175–80; Daniel S. Hirshfield, The Lost Reform (Cambridge: Harvard University Press, 1970), 44–52.

95. Committee on Economic Security, Report to the President (Washington, D.C.: U.S. Government Printing Office, 1935).

96. “Report of the Special Reference Committee,” JAMA 104 (March 2, 1935), 751–52. This was really no concession at all.

97. Arthur J. Altmeyer, The Formative Years of Social Security (Madison, Wis.: University of Wisconsin Press, 1968), 57–58n; Witte, Development of the Social Security Act, 185ff, 205–10; Hirshfield, Lost Reform, 55–60.

98. Douglas, Social Security, 100–01.

99. G. St. J. Perrot, Edgar Sydenstricker, and Selwyn D. Collins, “Medical Care During the Depression,” Milbank Memorial Fund Quarterly 12 (April 1934), 99–114.

100. New York Times, June 12, 1938.

101. Paul A. Dodd, Economic Aspects of Medical Services (Washington, D.C.: Graphic Arts Press, 1939), 209; Simon Kuznets and Milton Friedman, “Income from Independent Practice, 1929–1936,” National Bureau of Economic Research Bulletin (February 5, 1939), 8; George D. Wolf, The Physician’s Business (Philadelphia: Lippincott, 1938), 112.

102. New York State Legislative Commission on Medical Care, Medical Care for the People of New York State (n.p.: February 15, 1946), 171–72; Franz Goldmann, Public Medical Care (New York: Columbia University Press, 1945). Even though the federal government appropriated no money for medical care under old-age assistance, its contributions to cash allowances freed up state money to be used for medical care. The state of Washington in 1941 established the right of persons over sixty-five to “more or less complete medical care at public expense” (ibid., 74).

103. Samuel Lubell and Walter Everett, “Rehearsal for State Medicine,” Saturday Evening Post, December 17, 1938, 23ff.

104. Morris Fishbein, History of the American Medical Association (Philadelphia: Saunders, 1947), 407–08.

105. Mary Ross, “California Weighs Health Insurance,” Survey Graphic 24 (May 1935), 213ff.

106. George A. Shipman, Robert J. Lampman and S. Frank Miyamoto, Medical Service Corporations in the State of Washington (Cambridge: Harvard University Press, 1962), 22–23.

107. Walter Bierring, “The Family Doctor and the Changing Order,” JAMA 102 (June 16, 1934), 1997.

108. Friedman and Kuznets, Incomes from Independent Professional Practice, 12–20.

109. Hirshfield, The Lost Reform, 76–78.

110. Oliver Garceau, The Political Life of the American Medical Association (Cambridge: Harvard University Press, 1941), 132.

111. Ibid., 77

112. George Gallup, “Most Doctors Back Health Insurance,” New York Times, June 15, 1938; Garceau, Political Life, 133–34.

113. Hirshfield, The Lost Reform, 128–30; Garceau, Political Life, 147–52.

114. Quoted in James Rorty, American Medicine Mobilizes (New York: Norton, 1939), 93–94; see also John P. Peters, “Medicine and the Public,” New England Journal of Medicine 220 (March 23, 1939), 504–10.

115. “The American Foundation Proposals for Medical Care,” JAMA 109 (October 16, 1937), 1280–81.

116. Hirshfield, The Lost Reform, 102–05.

117. “A National Health Program: Report of the Technical Committee on Medical Care,” in Interdepartmental Committee to Coordinate Health and Welfare Activities, Proceedings of the National Health Conference, July 18, 19, 20, 1938, Washington, D.C. (Washington, D.C.: U.S. Government Printing Office, 1938), 29–63.

118. Altmeyer, Formative Years, 96.

119. “Procedings of the Special Session,” JAMA 111 (September 24, 1938), 1191–1217; Morris Fishbein, “American Medicine and the National Health Plan,” New England Journal of Medicine 220 (March 23, 1939), 495–504. Fishbein ridicules the national health program.

120. Arthur J. Viseltear, “Emergence of the Medical Care Section of the American Public Health Association, 1926–48,” American Journal of Public Health 63 (November 1973). 992.

121. Altmeyer, Formative Years, 96.

122. Ibid., 115.

123. Robert F. Wagner, “The National Health Bill,” American Labor Legislation Review 29 (1939), 13–44.

124. Altmeyer, Formative Years, 126–27.

125. William Leuchtenberg, Franklin D. Roosevelt and the New Deal, 1932–1940 (New York: Harper & Row, 1963), 88.

126. Hirshfield, The Lost Reform, passim.

127. In the discussion of public opinion, I follow Michael E. Schiltz, Public Attitudes Toward Social Security 1935–1965 (Washington, D.C.: U.S. Government Printing Office, 1970). 123–50.

128. John Blum, From the Morgenthau Diaries: Years of War, 1941–1945 (Boston: Houghton Mifflin, 1967), 72.

129. Altmeyer, Formative Years, 261.

130. For background on the bill, see Monty M. Poen, Harry S. Truman Versus the Medical Lobby (Columbia, Mo.: University of Missouri Press, 1979), 31–36. I am indebted to Poen’s account for much of the following discussion.

131. Ibid., 42–43.

132. “A National Health Program: Message from the President,” Social Security Bulletin (December 1945), 7.

133. Ibid., 8.

134. Ibid., 11.

135. A. J. Altmeyer, “How Can We Assure Adequate Health Service for All the People?” Social Security Bulletin (December 1945), 15–16.

136. Poen, Truman Versus the Medical Lobby, 85–86.

137. Schiltz, Public Attitudes Toward Social Security, 134.

138. Foote, Cone, and Belding, Survey of Public Relations of the California Medical Profession (n.p., 1944), 4–5.

139. New York State Legislative Commission, Medical Care for the People of New York State, 26–28.

140. Foote, Cone, and Belding, Survey of Public Relations; Schiltz, Public Attitudes Toward Social Security, 136–39.

141. Richard Harris, A Sacred Trust (New York: New American Library, 1966), 31–33.

142. U.S. Senate, National Health Program, Hearings Before the Committee on Education and Labor, 77th Cong., 2nd sess., pt. 1, April 2–16, 1946, 47ff.

143. Poen, Truman Versus the Medical Lobby, 75–80, 90.

144. Ibid., 96–97.

145. Ibid., 102–06.

146. National Health Assembly, America’s Health: A Report to the Nation (New York: Harper and Brothers, 1949).

147. Harris, Sacred Trust, 44–46.

148. Schiltz, Public Attitudes Toward Social Security, 134.

149. Poen, Truman Versus the Medical Lobby, 118–22.

150. Altmeyer, Formative Years, 261–62.

151. Ibid., 185–86.

152. Poen, Truman Versus the Medical Lobby, 181–82.

153. Godfrey Hodgson, America in Our Time (New York: Doubleday, 1977), 77.

Chapter Two

The Triumph of Accommodation

1. The idea that indemnity and service-benefit plans represent different approaches to risk is developed in William C. L. Hsiao and Beth Stevens, “Cooptation Versus Isolation: Health Insurance Organizations and Their Relations with Physicians,” (unpublished paper, Harvard University School of Public Health, July 15, 1980).

2. Marquis James, The Metropolitan Life: A Study in Business Growth (New York: Viking, 1947), 262–64; Report of the Health Insurance Commission of Illinois (n.p.: May 1, 1919), 135–40; Edwin J. Faulkner, Health Insurance (New York: McGraw-Hill, 1960), Chap. 16.

3. Pierce Williams, The Purchase of Medical Care Through Fixed Periodic Payment (New York: National Bureau of Economic Research, 1932), 258–60.

4. Committee on the Costs of Medical Care, Medical Care for the American People (Chicago: University of Chicago Press, 1932), 91–92.

5. For the conventional account, see C. Rufus Rorem, Blue Cross Hospital Service Plans (Chicago: Hospital Service Plan Commission, 1944), 7; on private promotion, see Michael M. Davis and C. Rufus Rorem, The Crisis in Hospital Finance (Chicago: University of Chicago Press, 1932), 211–13; also, Louis S. Reed, Blue Cross and Medical Service Plans (Washington, D.C.: Federal Security Agency, 1949), 9–10.

6. “A Statistical Analysis of 2,717 Hospitals,” Bulletin of the American Hospital Association 4 (July 1930), 68.

7. Davis and Rorem, Crisis in Hospital Finance, 5.

8. Ibid., 3.

9. Ibid., 12.

10. Rorem, Blue Cross Hospital Service Plans, 7, 12–13.

11. Reed, Blue Cross and Medical Service Plans, 13–14, 54–56.

12. Odin W. Anderson, Blue Cross Since 1929: Accountability and the Public Trust (Cambridge, Mass.: Ballinger, 1975), 42.

13. Reed, Blue Cross and Medical Service Plans, 11–12, 54–58.

14. Rorem, Blue Cross Hospital Service Plans, 11.

15. By sustaining hospitals that would have otherwise gone bankrupt through competition, the community-wide plans may be said to have preserved a wider set of alternative facilities. But they did so at a price people probably did not realize they were paying.

16. C. Rufus Rorem, “Group Hospitalization Plans Forge Ahead,” Hospitals 10 (April 1936), 62–66; “Group Hospitalization Plans Protect One Million Persons,” Hospitals 11 (July 1937), 120–22.

17. Anderson, Blue Cross Since 1929, 40.

18. Duncan M. MacIntyre, Voluntary Health Insurance and Rate Making (Ithaca, N.Y.: Cornell University Press, 1962), 124–25; C. A. Kulp, Casualty Insurance (New York: Ronald Press, 1956); U.S. Senate, Committee on Labor and Public Welfare, Health Insurance Plans in the United States, Report no. 359, pt. 2, 82d Cong., 1st sess., 1951 (henceforth cited as “1951 Senate Report”), 99.

19. Herman N. Somers and Anne R. Somers, Doctors, Patients and Health Insurance (Washington, D.C.: The Brookings Institution, 1961), 548.

20. JAMA 104 (May 4, 1935), 1614.

21. JAMA 111 (September 24, 1938), 1216.

22. Davis and Rorem, Crisis in Hospital Finance, 90–96.

23. E. M. Dunstan and Jo C. Alexander, “Group Hospitalization Plan: Survey of Local Organized Medical Opinion on the Baylor University Hospital,” Hospitals 10 (August 1936), 75–81.

24. JAMA 102 (June 30, 1934), 2200–01. This is this source for the quotations from the ten principles that appear in the following paragraphs.

25. At the 1935 meeting of the AMA House of Delegates, the wording was revised to read: “In whatever way the cost of medical service may be distributed, it should be paid for by the patient in accordance with his income status and in a manner that is mutually satisfactory.” JAMA 104 (June 29, 1935), 2364.

26. Davis and Rorem, Crisis in Hospital Finance, 202–03.

27. George A. Shipman et al., Medical Service Corporations in the State of Washington (Cambridge: Harvard University Press, 1962).

28. Mary Ross, “The Case of the Ross-Loos Clinic,” Survey Graphic 24 (June 1935), 300ff; Arnold I. Kisch and Arthur J. Viseltear, The Ross-Loos Medical Group, U.S. Public Health Service, Medical Care Administration Study no. 3 (1967).

29. Paul de Kruif, Kaiser Wakes the Doctors (New York: Harcourt Brace, 1943), 20–35.

30. Davis and Rorem, Crisis in Hospital Finance, 205–06.

31. “How Prepayment Got Its Start,” Group Practice 22 (December 1973), 17–19.

32. Jerome Schwartz, “Early History of Prepaid Medical Care Plans,” Bulletin of the History of Medicine 39 (September–October 1965), 470–75, and idem, “Prepayment Clinics of the Mesabi Iron Range: 1904–1964,” Journal of the History of Medicine and the Allied Sciences 22 (April 1967), 139–51.

33. Michael Shadid, “Rural Health Projects in Action—II,” American Cooperation, 1946 (Washington, D.C.: American Institute of Cooperation, 1947), 429.

34. Michael Shadid, A Doctor for the People (New York: The Vanguard Press, 1939).

35. Ben Swigart, “Rural Health Projects in Action—I,” American Cooperation, 1946, 423–28; Eugene Butler, “Cooperatives and Rural Health: II. What Texas Has Done,” American Cooperation, 1947, 420–27.

36. Franz Goldmann, Voluntary Medical Care Insurance in the United States (New York: Columbia University Press, 1948), 130, 135.

37. Goldmann, Voluntary Medical Care Insurance, 65–66. The following year the CIO suggested that as a “spur” to the adoption of national health insurance, CIO unions assist in forming medical cooperatives in their communities.

38. Shadid, “Rural Health Projects in Action,” 432.

39. Michael Shadid, “Cooperative Versus Competitive Medicine,” American Cooperation, 1940, 83–88.

40. Ross, “Case of the Ross-Loos Clinic”; Andrew and Hannah Biemiller, “Medical Rift in Milwaukee,” Survey Graphic 27 (August 1938), 418–20; Waldeman Kaempffert, “Group Practice Fight Growing More Bitter,” New York Times, August 7, 1938; Thomas N. Bonner, Medicine in Chicago (Madison, Wis.: American Historical Research Center, 1957), 217–18; James Rorty, American Medicine Mobilizes (New York: Norton, 1939), 135ff.

41. American Medical Association v. United States 110 F 2d 703; Rorty, American Medical Mobilizes, 286.

42. 110 F 2d 703.

43. Washington Post, December 21, 1938 (emphasis added).

44. American Medical Association v. United States 317 U.S. 519 (1943).

45. Horace R. Hansen, “Group Health Plans: A Twenty-Year Legal Review,” Minnesota Law Review 42 (March 1958), 527–48.

46. JAMA 111 (July 2, 1938), 59.

47. Ibid., 119 (June 20, 1942), 727–28.

48. Anderson, Blue Cross Since 1929, 58n.

49. Reed, Blue Cross and Medical Service Plans, 137–41; Joseph W. Garbarino, Health Plans and Collective Bargaining (Berkeley: University of California Press, 1960), 89–106.

50. Garbarino, Health Plans and Collective Bargaining, 106–11.

51. Anderson, Blue Cross Since 1929, 45; Nathan Sinai, Odin W. Anderson, and Melvin L. Dollar, Health Insurance in the United States (New York: Commonwealth Fund, 1946), 73, 84–94.

52. Sinai, Anderson, and Dollar, Health Insurance in the United States, 64–65.

53. Reed, Blue Cross and Medical Service Plans, 81–91.

54. Ibid., 69–71; Cone, Foote, and Belding, “Survey of Public Relations of the California Medical Association,” 81. New York Legislative Commission on Medical Care, Medical Care for the People of New York State (n.p.: February 15, 1946), 223.

55. Ibid., 81–82.

56. Daniel Hirshfield, The Lost Reform (Cambridge: Harvard University Press, 1970), 97.

57. Leon Applebaum, “The Development of Voluntary Health Insurance in the United States,” Journal of Risk and Insurance (September 1961), 15–23; John T. Dunlop, “Appraisal of the Wage Stabilization Policies,” U.S. Department of Labor, Bulletin no. 1009, 166–67.

58. Raymond Munts, Bargaining for Health (Madison, Wis.: University of Wisconsin Press, 1960), 7–12.

59. Ibid., 9–10; Garbarino, Health Plans and Collective Bargaining, 19.

60. On Taft-Hartley, see Munts, Bargaining for Health, 10–12, and Arthur F. McClure, The Truman Administration and the Problems of Postwar Labor, 1945–1948 (Rutherford, N.J.: Fairleigh Dickinson Press, 1969), 162–84.

61. H. M. Douty, “Post-war Wage Bargaining in the United States,” in Labor and Trade Unionism, ed. Walter Galenson and Seymour Martin Lipset (New York: Wiley, 1960), 192–202.

62. Garbarino, Health Plans and Collective Bargaining, 19–20.

63. Odin W. Anderson and Jacob J. Feldman, Family Medical Costs and Voluntary Health Insurance: A Nationwide Survey (New York: McGraw-Hill, 1956), 11.

64. 1951 Senate Report, 98–99.

65. Ibid., 122.

66. Munts, Bargaining for Health, 104.

67. Garbarino, Health Plans and Collective Bargaining, 280–82.

68. The following analysis relies on Janet E. Ploss, “A History of the Medical Care Program of the United Mine Workers of America Welfare and Retirement Fund” (Master’s thesis, Johns Hopkins School of Hygiene and Public Health, 1980). I am much indebted to Ms. Ploss for allowing me to draw upon her excellent study.

69. See Derek C. Bok and John T. Dunlop, Labor and the American Community (New York: Simon and Schuster, 1970).

70. Ploss, “History of the Medical Care Program,” Chap. 1.

71. U.S. Department of the Interior, A Medical Survey of the Bituminous-Coal Industry (Washington, D.C.: U.S. Government Printing Office, 1947), 75–77, 111, 123, 137–64.

72. Ploss, “History of the Medical Care Program,” Chap. 2; Leslie Falk, “Group Health Plans in Coal Mining Communities,” Journal of Health and Human Behavior 4 (Spring 1963). 4–13.

73. Munts, Bargaining for Health, 99; see also idem, 61–63, and Garbarino, Health Plans and Collective Bargaining, 182.

74. Munts, Bargaining for Health, 21.

75. Garbarino, Health Plans and Collective Bargaining, 149–57; see also Wallace Croatman, “Are Labor’s Health Centers a Threat to Doctors?” Medical Economics 31 (October 1954), 109–18.

76. Goldmann, Voluntary Medical Care Insurance, 150.

77. Angus McDonald, “Health on the Farm,” The New Republic 116 (March 3, 1947), 32–33.

78. Jerry Voorhis, American Cooperatives (New York: Harpers and Brothers, 1961), 32; Somers and Somers, Doctors, Patients and Health Insurance, 348–49. See also Helen L. Johnston, “Rural Health Cooperatives,” Public Health Bulletin no. 308 (1950).

79. William A. MacColl, “Reflections on the Birth of Group Health,” Group Health Cooperative of Puget Sound, February 1972, 4. See also idem, Group Practice and Prepayment of Medical Care (Washington, D.C.: Public Affairs Press, 1966), 36–42.

80. On Kaiser’s early history, see de Kruif, Kaiser Wakes the Doctors, passim; Greer Williams, Kaiser-Permanente Health Plan: Why It Works (Oakland, Calif.: Henry J. Kaiser Foundation, 1971), 4–6; Waldemar Nielsen, The Big Foundations (New York: Columbia University Press, 1973), 245–49; E. W. Saward et al., “Documentation of Twenty Years of Operation and Growth of a Prepaid Group Practice Plan,” Medical Care 6 (May–June 1968), 231–44.

81. On HIP, see George Baehr, A Report of the First Ten Years (New York: HIP, 1957); Louis L. Feldman, Organization of a Medical Group Practice Prepayment Program in New York City (New York: HIP, 1953) and idem, “Legislation and Prepayment for Group Practice,” Bulletin of the New York Academy of Medicine 47 (April 1971), 411–22.

82. “The Patient’s Dilemma,” San Francisco Chronicle, February 22. 1949, reprinted in U.S. Senate, National Health Program, 1949, Hearings Before a Subcommittee of the Committee on Labor and Public Welfare, pt. 1, May 23-June 2, 1949, 81 Cong., 1st sess., 271–76; Garbarino, Health Plans and Collective Bargaining, 125–27.

83. Garbarino, Health Plans and Collective Bargaining, 205–23.

84. Kenneth P. Andrews, “How They’re Fighting the Kaiser Plan,” Medical Economics 31 (September 1954), 126–31.

85. Group Health Cooperative of Puget Sound v. King County Medical Society, 39 Wash. 2d 586, 237 Pac 2d 737 (1951); see also Claron Oakley, “Closed Panel Plans are Hard to Beat in Court,” Medical Economics 32 (May 1955), 103–07.

86. Claron Oakley, “They Met the Challenge of Panel Medicine,” Medical Economics 32 (February 1955), 122–30.

87. Garbarino, Health Plans and Collective Bargaining, 191–96.

88. Commission on Medical Care Plans, Report, pt. 1., JAMA (January 17, 1959), 34–42, 63.

89. However, group enrollees in the cooperative (about 60 percent of the membership as of 1973) did not have voting rights as members; they were represented by their bargaining agents in periodic negotiations. The dual structure of the plan originated in 1945 when the cooperative purchased the Medical Security Clinic, which had several industrial contracts among its assets. For a discussion, see “Who Should Run Group Health?” View (Group Health Cooperative), January–February 1973, 4–6. See also Jerome L. Schwartz, “Participation of Consumers in Prepaid Health Plans,” Journal of Health and Human Behavior 5 (Summer and Fall 1964), 74–84.

90. 1951 Senate Report, 80–81; Odin W. Anderson, Patricia Collette, and Jacob J. Feldman, Changes in Family Medical Expenditures and Voluntary Health Insurance: A Five-Year Resurvey, (Cambridge: Harvard University Press, 1963), 8–9. The relative standings of the commercial insurers, Blue Cross, and the independent plans stayed about the same between 1953 and 1958. Howevever, Blue Shield increased its share of the market significantly.

91. 1951 Senate Report, 74–79, 99–106.

92. MacIntyre, Voluntary Health Insurance and Rate Making 58. The data refer to 1959, but the pattern was the same earlier. See 1951 Senate Report, 110–11, and Somers and Somers, Doctors, Patients and Health Insurance, 300, 326–27.

93. MacIntyre, Voluntary Health Insurance and Rate Making, 26–49; Somers and Somers, Doctors, Patients and Health Insurance, 309–11.

94. Ibid., 155–61.

95. Garbarino, Health Plans and Collective Bargaining, 228.

96. Somers and Somers, Doctors, Patients and Health Insurance, 304.

97. Ibid., 261–62, citing C. A. Kulp.

98. Other factors, such as per-capita income, were positively related to Blue Cross development. But in the Pacific states, as Reed pointed out, per capita income was high, but the hospitals were not “strongly voluntary,” many having recently converted from proprietary status. Blue Cross had made relatively slow progress there. See Reed, Blue Cross and Medical Service Plans, 28–30.

99. Somers and Somers, Doctors, Patients and Health Insurance, 300.

100. Anderson, Collette, and Feldman, Changes in Family Medical Expenditures, 4–6, 171.

101. Garbarino, Health Plans and Collective Bargaining, 22.

Chapter Three

The Liberal Years

1. U.S. Public Health Service, Office of Research, Statistics and Technology, Health: United States 1981 (Hyattsville, Md.: U.S. Department of Health and Human Services, 1981), 263; Maryland Y. Pennell and David B. Hoover, Health Manpower Source Book 21: Allied Health Manpower Supply and Requirements: 1950–1980 (Bethesda, Md.: U.S. Department of Health, Edcuation and Welfare, 1970), 4.

2. “Report of the Medical Advisory Committee,” in Vannevar Bush, Science: The Endless Frontier (1945; reprint ed., Washington, D.C.: National Science Foundation, 1960), 49.

3. Godfrey Hodgson, America in Our Time (New York: Doubleday, 1976), 19.

4. See, for example, Harry Stack Sullivan, “Remobilization for Enduring Peace and Social Progress,” Psychiatry 10 (August 1947), 239–52; and, for a critical review, Christopher Lasch, Haven in a Heartless World: The Family Besieged (New York: Basic Books, 1977), 97–99.

5. A. Hunter Dupree, “Central Scientific Organization in the United States Government,” Minerva 1 (Summer 1963), 453–69.

6. Richard H. Shryock, American Medical Research (New York: Commonwealth Fund 1947), 91–98. The following paragraphs draw frequently on Shryock.

7. Cited in ibid., 135–36.

8. On the scientific role of the Department of Agriculture, see Dupree, “Central Scientific Organization”; in relation to environmental toxicology, see James Whorton, Before Silent Spring: Pesticides and Public Health in Pre-DDT America (Princeton, N. J.: Princeton University Press, 1974); on antibiotics, Selman A. Waksman, “The Microbiology of the Soil and the Antibiotics,” in The Impact of the Antibiotics on Medicine and Society, ed. Iago Galdston (New York: International Universities Press, 1958), 3–7.

9. Stephen Strickland, Politics, Science and Dread Disease: A Short History of United States Medical Research Policy (Cambridge: Harvard University Press, 1972), 1–14. For the basic history, see Ralph C. Williams, The United States Public Health Service, 1798–1950 (Richmond, Va.: Whittet & Shepperson, 1951).

10. Shryock, American Medical Research, 277. On the history of the National Cancer Institute, see [Devra M. Breslow], A History of Cancer Control in the United States, 1946–1971, II, A History of Programmatic Developments in Cancer Control, U.S. Department of Health, Education and Welfare, National Cancer Institute, Publication no. (NIH) 79-1518; and Richard A. Rettig, Cancer Crusade: The Story of the National Cancer Act of 1971 (Princeton, N.J.: Princeton University Press, 1977).

11. A. N. Richards, “The Impact of the War on Medicine,” Science 103 (May 10, 1946), 578.

12. Bush, Science: The Endless Frontier, 6, 10–12, 31–40. For background on the report, see J. M. England, “Dr. Bush Writes a Report: ‘Science—the Endless Frontier,’” Science 191 (January 9, 1976), 41–47; also, more generally, Daniel S. Greenberg, The Politics of Pure Science (New York: New American Library, 1967).

13. For a summary of PHS activities and postwar developments, see Congressional Quarterly Service, Congress and the Nation, 1945–64: A Review of Government and Politics in the Postwar Years (Washington, D.C.: Congressional Quarterly Service, 1965), 1126–33; also, Williams, United States Public Health Service. The budget figures come from Strickland, Politics, Science and Dread Disease, 29.

14. On the Lasker lobby, see Strickland, Politics, Science and Dread Disease, 32–54, and Elizabeth Brenner Drew, “The Health Syndicate: Washington’s Noble Conspirators,” Atlantic Monthly 220 (December 1967), 75–82.

15. Kenneth M. Endicott and Ernest M. Allen, “The Growth of Medical Research 1941–1953 and the Role of the Public Health Service Research Grants,” Science 118 (September 25, 1953), 337. See also Thomas B. Turner, “The Medical Schools Twenty Years Afterwards: Impact of the Extramural Research Support of the National Institutes of Health,” Journal of Medical Education 42 (February 1967), 109–18.

16. Endicott and Allen, “Growth of Medical Research,” 341.

17. Morris Janowitz, The Professional Soldier (New York: Free Press, 1960).

18. William Menninger, Psychiatry in a Troubled World: Yesterday’s War and Today’s Challenge (New York: Macmillan, 1948).

19. William Menninger, Psychiatry: Its Evolution and Present Status (Ithaca, N.Y.: Cornell University Press, 1948), 2. On the earlier development of psychiatry, see Nathan G. Hale, Jr., Freud and the Americans (New York: Oxford University Press, 1971).

20. Albert Deutsch, The Shame of the States (New York: Harcourt Brace, 1948), 138–39. See also idem, The Mentally Ill in America (New York: Columbia University Press, 1949), 448–49.

21. On the background of the legislation, see Jeanne L. Brand, “The National Mental Health Act of 1946: A Retrospect,” Bulletin of the History of Medicine 39 (May–June 1965), 231–44. For an account of the rise of NIMH, see Robert H. Connery et al., The Politics of Mental Health (New York: Columbia University Press, 1968).

22. Richard Carter, Breakthrough: The Saga of Jonas Salk (New York: Trident Press, 1966), 1. See also David Sills, The Volunteers (Glencoe, Ill.: Free Press, 1957), esp. 176–99, and John R. Paul, A History of Poliomyelitis (New Haven, Conn.: Yale University Press, 1971).

23. For a budget chart, see Congressional Quarterly Service, Congress and the Nation, 1132. On the congressional backing, see Strickland, Politics, Science and Dread Disease, 75–183; and for a general review by the director of NIH in its golden age, see James A. Shannon, “The Advancement of Medical Research: A Twenty Year View of the Role of the National Institutes of Health,” Journal of Medical Education 42 (February 1967), 97–108.

24. Strickland, Politics, Science and Dread Disease, 55–74.

25. I have written at length on the background and problems of the VA hospitals in my book The Discarded Army: Veterans After Vietnam (New York: Charterhouse, 1974), 71–112.

26. Dan Feshbach, “What’s Inside the Black Box: A Case Study of Allocative Politics in the Hill-Burton Program,” International Journal of Health Services 9 (1979), 313–39.

27. Commission on Hospital Care, Hospital Care in the United States (New York: Commonwealth Fund, 1947), 411.

28. Feshbach, “What’s Inside the Black Box”; Herbert Klarman, “Planning for Facilities,” in Regionalization and Health Policy, ed. Eli Ginzburg (Washington, D.C.: U.S. Government Printing Office, 1973), 27. See also Frank J. Thomson, Health Politics and the Bureaucracy: Politics and Implementation (Cambridge, Mass.: MIT Press, 1981), 29–38. A case study by Ray Elling suggests that, beneath the surface of consensus described by Thomson, the political conflicts were intense; see Ray H. Elling, “The Hospital-Support Game in Urban Center,” in The Hospital in Modern Society, ed. Eliot Freidson (New York: Free Press, 1963), 73–111.

29. U.S. Department of Health, Education and Welfare, Facts About the Hill-Burton Program, July 1, 1947-June, 30, 1971; Judith R. Lave and Lester B. Lave, The Hospital Construction Act: An Evaluation of the Hill-Burton Program, 1948–1973 (Washington, D.C.: American Enterprise Institute, 1974)

30. However, the program did not succeed in attracting doctors to low-income states, as its supporters originally predicted. See Lawrence J. Clark et al., “The Impact of Hill-Burton: An Analysis of Hospital Bed and Physician Distribution in the United States, 1950–1970,” Medical Care 18 (May 1980), 532–50. Nor did it redistribute doctors within states. See William A. Rushing, Community, Physicians and Inequality (Lexington, Mass.: Lexington Books, 1975), 200–03.

31. On the distribution of funds by community, see Lave and Lave, Hospital Construction Act, 19–21; and Jacquelyn Hochban et al., “The Hill-Burton Program and Changes in Health Services Delivery,” Inquiry 8 (Spring 1981), 61–69. De Vise notes that in twenty-five years of the Hill-Burton program not one inner-city hospital in Chicago received aid, while two dozen in the suburbs were built or expanded with federal assistance. See Pierre de Vise, Misused and Misplaced Hospitals and Doctors: A Locational Analysis of the Urban Health Care Crisis (Washington, D.C.: Association of American Geographers, 1973), 76.

32. In 1949 the law was revised to vary the proportion of local funds required from two thirds in high-income states to one third in low-income states. Thus state per capita income entered the process twice—first, in allocating funds among the states; second, in determining what proportion of the cost local sponsors would have to raise.

33. Quoted in Feshbach, “What’s Inside the Black Box,” 326.

34. For a review of the legal history, see Rand E. Rosenblatt, “Health Care Reform and Administrative Law: A Structural Approach,” Yale Law Journal 88 (December 1978), 264–86.

35. Don K. Price, “A Political Hypochondriac Looks at the Future of Medicine” (National Academy of Sciences, Washington, D.C., May 9, 1973).

36. Edward A. Shils, “The Autonomy of Science,” in The Sociology of Science, ed. Bernard Barber and Walter Hirsch (New York: Free Press, 1962), 610–14.

37. Stevens, American Medicine and the Public Interest, 350–51.

38. John E. Deitrick and Robert C. Berson, Medical Schools in the United States at Mid-century (New York: McGraw-Hill, 1953), 195; Patricia L. Kendall, The Relationship Between Medical Educators and Medical Practitioners (Evanston, Ill.: Association of American Medical Colleges, 1965), 32.

39. Robert G. Petersdorf, “The Evolution of Departments of Medicine,” New England Journal of Medicine 303 (August 28, 1980), 491.

40. Vernon W. Lippard, A Half Century of Medical Education: 1920–1970 (New York: Josiah Macy, Jr., Foundation, 1974), 42–43.

41. Kendall, Relationship Between Medical Educators and Medical Practitioners, 36, 42, 57.

42. Marcus S. Goldstein, Income of Physicians, Osteopaths and Dentists from Professional Practice (Washington, D.C.: Social Security Administration, Office of Research and Statistics, 1972).

43. Kendall, Relationship Between Medical Educators and Medical Practitioners, 82.

44. Lippard, Half Century, 47–48.

45. Quoted in Robert K. Merton, “Some Preliminaries to a Sociology of Medical Education,” in The Student Physician, ed. Robert K. Merton, George G. Reader, and Patricia L. Kendall (Cambridge: Harvard University Press, 1957), 24.

46. Patricia L. Kendall and Hanan C. Selvin, “Tendencies Toward Specialization in Medical Training,” in ibid., 153–74; student quoted, ibid., 163.

A survey of graduates of six public and six private medical schools from the classes of 1950 and 1954 indicates the tendency toward specialization was more pronounced at the private institutions. Fremont J. Lyden, H. Jack Geiger, and Osler L. Peterson, The Training of Good Physicians: Critical Factors in Career Choices (Cambridge: Harvard University Press, 1968).

In the late fifties, at least at Harvard Medical School, there seems also to have been a shift from emphasis on private specialty practice to scientic work; this was at the height of public support for medical research and may also have reflected the general post-Sputnik climate. See Daniel H. Funkenstein, Medical Students, Medical Schools and Society During Five Eras: Factors Affecting the Career Choice of Physicians 1958–1976 (Cambridge, Mass.: Ballinger, 1978).

47. Stevens, American Medicine and the Public Interest, 203, 244–57. See also Patricia L. Kendall, “Medical Specialization: Trends and Contributing Factors” in Psychosocial Aspects of Medical Training, ed. R. H. Coombs and C. E. Vincent (Springfield, Ill.: C. C Thomas, 1971), 449–97.

48. For discussions of these developments, see Stevens, American Medicine and the Public Interest, 208–17, 258–66; and Lippard, Half Century, 93–95.

49. Stevens, American Medicine and the Public Interest, 279–80.

50. J. A. Curran. “Internships and Residencies Historical Backgrounds and Current Trends,” Journal of Medical Education 34 (September 1959), 873–84.

51. For supporting data on these points, see Roy Penchansky and Gerald Rosenthal, “Productivity, Price and Income Behaviour in the Physicians’ Services Market—a Tentative Hypothesis,” Medical Care 3 (October–December 1965), 240–44.

52. Mark S. Blumberg, “Physicians Fees as Incentives,” in Changing the Behavior of the Physician: A Management Perspective (Proceedings of the Twenty-First Annual Symposium on Hospital Affairs, Graduate Program in Hospital Administration and Center for Health Administration Studies, Graduate School of Business, University of Chicago, June 1979). 29–30.

53. Penchansky and Rosenthal, “Productivity, Price and Income Behavior.”

54. Kendall, “Medical Specialization: Trends and Contributing Factors,” 460. For an interesting interpretation that relates specialty prestige to variations in doctor-patient relations, see Stephen M. Shortell, “Occupational Prestige Differences Within the Medical and Allied Health Professions,” Social Science and Medicine 8 (January 1974), 1–9.

55. Surgeon General’s Consultant Group on Medical Education, Physicians for a Growing America (Washington, D.C.: U.S. Government Printing Office, 1959), 8–11.

56. U.S. Department of Health Education and Welfare, Division of Public Health Methods, Health Manpower Source Book, vol. 9, Physicians, Dentists and Professional Nurses, 27.

57. Selwyn D. Collins, “Frequency and Volume of Doctors’ Calls Among Males and Females in 9,000 Families, Based on Nationwide Periodic Canvasses, 1928–31,” Public Health Reports 55 (November 1, 1940), 1977–2020; Antonio Ciocco, Isidore Altman and T. David Truan, “Patient Load and Volume of Medical Services,” Public Health Reports 67 (June 1952), 533. See also Bernhard J. Stern, American Medical Practice in the Perspectives of a Century (New York: Commonwealth Fund, 1945).

58. Raymond S. Duff and August B. Hollingshead, Sickness and Society (New York: Harper Row, 1968), 58.

59. U.S. Department of Health, Education and Welfare, Health Manpower Source Book, 9:18, 25.

60. Rosemary Stevens and Joan Vermeulen, Foreign Trained Physicians and American Medicine (U.S. Department of Health Education and Welfare, 1972), 112.

61. John C. Nunemaker et al., “Graduate Medical Education in the United States,” JAMA 174 (October 8, 1960), 578.

62. Alice M. Yohalem and Charles M. Brecher, “The University Medical Center and the Metropolis: A Working Paper,” in The University Medical Center and the Metropolis, eds. Eli Ginzburg and Alice M. Yohalem (New York: Josiah Macy, Jr., Foundation, 1974), 10–13; “Graduate Medical Education: Annual Report on Graduate Medical Education in the United States,” JAMA 226 (November 19, 1973), 930.

The term “empire” comes from John Ehrenreich and Barbara Ehrenreich, The American Health Empire: Power, Politics and Profits (New York: Random House, 1970). More than any other single book, this focused attention on the growing power of medical schools and their relation to the larger system. But perhaps because they were writing from the perspective of New York City, the authors did not, I think, see the historical and economic limits of the phenomenon.

63. Willard C. Rappleye, The Current Era of the Faculty of Medicine, Columbia University, 1910–1958 (New York: Columbia University Press, 1958).

64. Duff and Hollingshead, Sickness and Society, 46.

65. American Hospital Association, Hospital Statistics, 1972 (Chicago: American Hospital Association, 1972), 190; see also Cecil G. Sheps et al., Medical Schools and Hospitals: Interdependence for Education and Service (Evanston, Ill.: Association of American Medical Colleges, 1965) in Journal of Medical Education 40 (September 1965), pt. II, 12.

66. For this schema, I am indebted to Alfred E. Miller, “The Changing Structure of the Medical Profession in Urban and Suburban Settings,” Social Science and Medicine 11 (March 1977), 233–43.

67. Hodgson, America in Our Time, 7.

68. Surgeon General’s Consultant Group on Medical Education, Physicians for a Growing America (Washington, D.C.: U.S. Government Printing Office, 1959).

69. Milton I. Roemer and Max Shain, “Hospital Utilization Under Insurance,” mimeographed (Ithaca, N.Y.: Cornell University School of Business and Public Administration, 1959), 17–18, 51.

70. U.S. Bureau of the Census, Historical Statistics of the United States, Colonial Times to 1970 (Washington, D.C.: U.S. Department of Commerce, 1975), 84.

71. For a review of the debate, see Andrew T. Scull, Decarceration (Englewood Cliffs, N.J.: Spectrum, 1977).

72. Joint Commission on Mental Illness and Health, Action for Mental Health (New York: Basic Books, 1961). For the historical background, see Connery et al., Politics of Mental Health, 37–47.

73. “Special Message to the Congress on Mental Illness and Mental Retardation, February 5, 1963,” Public Papers of the President, John F. Kennedy, 1963, 126, 128. For studies of the program, see Franklin D. Chu and Sharland Trotter, The Madness Establishment (New York: Grossman, 1974) and Connery et al., Politics of Mental Health.

74. James L. Sundquist, Politics and Policy: The Eisenhower, Kennedy and Johnson Years (Washington, D.C.: Brookings Institution, 1968), 13–56.

75. Daniel P. Moynihan, Maximum Feasible Misunderstanding: Community Action in the War on Poverty (New York: Free Press, 1969).

76. For the story of Medicare, see Theodore R. Marmor, The Politics of Medicare (Chicago: Aldine, 1973); Richard Harris, A Sacred Trust (New York: New American Library, 1966); and Sundquist, Politics and Policy, 287–321.

77. Harris, Sacred Trust, 110–15, 144; Marmor, Politics of Medicare, 35–38.

78. Robert Stevens and Rosemary Stevens, Welfare Medicine in America: A Case Study of Medicaid (New York: Free Press, 1974).

79. President’s Commission on Heart Disease, Cancer and Stroke, Report to the President: A National Program to Conquer Heart Disease, Cancer and Stroke (Washington, D.C.: U.S. Government Printing Office, 1964), v. 1, viii.

80. Drew, “Health Syndicate.”

81. H. Jack Geiger, “Community Control—or Community Conflict,” in Neighborhood Health Centers, ed. Robert M. Hollister, Bernard M. Kramer, and Seymour S. Bellin (Lexington, Mass.: Lexington Books, 1974), 140. On the origins of the health centers, see Sar Levitan, The Great Society’s Poor Law: A New Approach to Poverty (Baltimore: Johns Hopkins Press, 1969), 191–205; Lisbeth Bamberger Schorr and Joseph T. English, “Background, Context and Significant Issues in Neighborhood Health Center Programs,” Milbank Memorial Fund Quarterly 66 (July 1968), 289–96, reprinted in Hollister et al., eds., Neighborhood Health Centers, 45–50; and Daniel I. Zwick, “Some Accomplishments and Findings of Neighborhood Health Centers,” in ibid., 69–90.

82. Karen Davis and Cathy Schoen, Health and the War on Poverty (Washington, D.C.: Brookings Institution, 1978), 164.

83. Ibid., 173–200.

84. For subsequent developments, see “Community Health Centers—Fifteen Years Later,” Urban Health (April 1980), 34–40.

85. Davis and Schoen, Health and the War on Poverty, 41–48.

86. Karen Davis and Roger Reynolds, “The Impact of Medicare and Medicaid on Access to Medical Care,” in The Role of Health Insurance in the Health Services Sector, ed. Roger N. Rosett (New York: National Bureau of Economic Research, 1976). For a survey of programs and their effects, see Charles E. Lewis, Rashi Fein, and David Mechanic, A Right to Health: The Problem of Access to Primary Medical Care (New York: Wiley, 1976).

87. U.S. Bureau of the Census, Characteristics of the Population Below the Poverty Level: 1978, Series P-60, no. 124, June 1980, 16. The proportion of the poor with a working head of household dropped from 68 to 48 percent between 1959 and 1976 (ibid., 28). Even excluding female-headed households, the decline was from 75 to 60 percent (ibid., 34).

88. Compare National Center for Health Statistics, Bed Disability Among the Chronically Limited, United States July 1957–June 1961, Series 10, no. 12, and U.S. Department of Health, Education and Welfare, Health: United States, 1979, 117–18. Low-income persons had 66 percent more “bed disability” days per person than high-income persons in 1957–61, but in 1972 they had 123 percent more such days. See also Harold S. Luft, Poverty and Health: Economic Causes and Consequences of Health Problems (Cambridge, Mass.: Ballinger, 1978). About 65 percent of poor families consisting of at least a husband and wife include a disabled adult, and at least 30 percent of the disabled who are currently poor are poor because of their health problems.

89. Aday and her colleagues, adjusting use of physicians’ services by number of days of disability, find that by 1976 no differences existed between different levels of income. However, Kleinman, using a much larger survey for 1978, finds that high-income people were seeing physicians 73 percent more often in relation to a somewhat different index of need—bed disability days. The bed-disability index may reflect the differences in health more accurately. Ordinary disability days show less variation by income, perhaps because higher-income people include illnesses of lesser severity. See LuAnn Aday, Ronald Andersen, and Gretchen V. Fleming, Health Care in the U.S.: Equitable for Whom? (Beverly Hills, Calif.: Sage Publications, 1980); Kleinman’s data are presented in Karen Davis, Marsha Gold and Diane Makuc, “Access to Health Care for the Poor: Does the Gap Remain?” Annual Review of Public Health 2 (1981), 159–82.

For evidence on the continuing differences in waiting time and other indicators of access, see Frank Sloan and Judith K. Bentkover, Access to Ambulatory Care and the U.S. Economy (Lexington, Mass.: Lexington Books, 1979).

90. Davis, Gold, and Makuc, “Access to Health Care for the Poor.”

91. Davis and Schoen, Health and the War on Poverty, 52–56.

92. Judith M. Feder, Medicare: The Politics of Federal Hospital Insurance (Lexington, Mass.: Lexington Books, 1977). For an earlier study, see Herman Miles Somers and Anne Ramsay Somers, Medicare and the Hospitals: Issues and Prospects (Washington, D.C.: Brookings Institution, 1966), 154–96.

93. Klarman, “Planning for Facilities,” 25–36.

94. For another view of the limits of planning and reform, see Robert Alford, Health Care Politics: Ideological and Interest Group Barriers to Reform (Chicago: University of Chicago Press, 1975).

Alford proposes a theory of “structural interests” to explain what he regards as the negligible results of health reform. The key structural interests are (1) professional monopoly, the interest of physicians and the “dominant interest” of the system; (2) corporate rationalization, a “challenging interest” shared by medical school faculties, hospital administrators, health planners, and others associated with institutions; and (3) health equality, a “repressed” interest shared by the poor and other neglected people. Alford’s argument is that the failure of health reform has stemmed from a deadlock between professional monopoly and corporate rationalization.

This analysis—or at least the vocabulary Alford introduced—has proved highly persuasive to sociologists and political scientists studying American medicine. The approach represents an important contribution, but for several reasons I have chosen not to use it.

First of all, the concept of “stuctural interests” is almost metaphysical in its abstraction. Alford insists that structural interests are not to be confused with interest groups: “This concept [structural interests] leaves empirically open the extent to which and the conditions under which coalitions form and constitute interest groups in the usual sense. The central idea is that existing institutions function for all occupations, groups, or organizations which have the common interest signified by the classifying term.” (Ibid., 14–15; italics mine.) But can occupations, groups, and organizations be classifed unambiguously by the common structural interests Alford imputes to them? A major difficulty arises with the classification of hospital administrators as having interests structurally opposed to those of private physicians. For as I have argued earlier in this chapter, the interests of community hospitals and their doctors were intimately linked. Alford presumes that the support of some administrators for regionalization and other “corporate rationalist” reforms indicated a deep-seated interest of all administrators—or perhaps I should say, a structural interest of administration in its pure, Platonic sense.

The difficulty goes deeper. Alford hypothesizes the existence of structural interests, but he actually writes about the beliefs of the groups and their representatives. The book is largely an account of the various reports recommending reorganization of health services in New York City. Alford has little to say about the actual economic relations of the system, even in New York; the book is missing any sustained historical analysis of institutional structure. Consequently, the categories used to describe structural interests are drawn from an analysis of ideological differences, not of institutional arrangements.

Furthermore, the account does not persuasively explain why the hypothesized structural interests were deadlocked. Alford writes, “Rather than a societal consensus giving the doctors power, it is the doctors’ power which generates the societal consensus.” (Ibid., 17.) But where did the doctors’ power come from? We are left with the impression that it was always there, a kind of prime mover. On the other hand, the approach I have taken attempts to explain how the institutional structure of the medical system was historically produced, including how the power of the medical profession was generated. I do not take the interests of physicians as structurally unambiguous (see my discussion of the defeat of health insurance during the Progressive era), and I emphasize the decisive importance of political decisions in shaping the evolution of the system. The failure of reform cannot be understood primarily on the basis of divided interests within medicine; it is traceable to a more general pattern of political accommodation. (For a more extended discussion, see Paul Starr and Gösta Esping-Andersen, “Passive Intervention,” Working Papers for a New Society 7 [July–August 1979], 15–25)

Finally, Alford’s notion of “corporate rationalization” was plainly derived from New Left theories of “corporate liberalism” that were popular in the late 1960s. The latent function of such theories was to discredit the redistributive reforms proposed by liberals. The theories sought to associate such reforms with the hidden interests of established institutions, which could then be demonstrated to have caused the problems of inequality or alienation in the first place. Like other radical theories of the period, Alford’s minimizes and disparages the significance of liberal reforms by describing them as mere efforts to rationalize the corporate order. In his account, these reforms, by definition, do not satisfy the interests of poor people and others in need of medical care; what ought to be subject to empirical confirmation is written into his classification of structural interests. The term “corporate rationalization” does have a use in regard to medicine—specifically to describe the kinds of rationalization that health care corporations may bring about. (On those developments, see the final chapter of this book.)

95. For an interpretation that emphasizes correspondences between medicine and class structure in the United States, see Vicente Navarro, Medicine Under Capitalism (New York: Prodist, 1976).

96. On the concept of “structural power,” see Steven Lukes, Power: A Radical View (New York: Macmillan, 1974).

Chapter Four

End of a Mandate

1. U.S. Public Health Service, Office of Research, Statistics and Technology, Health: United States, 1981 (Hyattsville, Md.: U.S. Department of Health and Human Services, 1981), 263.

2. New York Times, July 11, 1969.

3. “$60-Billion Crisis in Health Care,” Business Week (January 17, 1970), 50–64.

4. “It’s Time to Operate,” Fortune 81 (January 1970), 79.

5. Ronald Andersen, Joanna Kravits and Odin W. Anderson, “The Public’s View of the Crisis in Medical Care: an Impetus for Changing Delivery Systems?” Economic and Business Bulletin 24 (1971), 44–52.

6. Godfrey Hodgson, “The Politics of American Health Care,” Atlantic 232 (October 1973), 55.

7. U.S. Public Health Service, Health: United States, 1981, 268–69.

8. Victor R. Fuchs, Who Shall Live? (New York: Basic Books, 1974), 92–95. More recent calculations of national health expenditures for these years are slightly higher. See U.S. Public Health Service, Health: United States, 1981, 263.

9. Martin S. Feldstein, “Hospital Cost Inflation: A Study of Nonprofit Price Dynamics,” American Economic Review 61 (December 1971), 853–72.

10. U.S. Public Health Service, Health: United States, 1981, 270.

11. Thomas L. Delbanco, Katherine C. Meyers, and Elliot A. Segal, “Paying the Physician’s Fee: Blue Shield and the Reasonable Charge,” New England Journal of Medicine 301 (December 13, 1979), 1314–20.

12. Mark S. Blumberg, “Physicians Fees as Incentives,” in Changing the Behavior of the Physician: A Management Perspective (Proceedings of the Twenty-First Annual Symposium on Hospital Affairs, Graduate Program in Hospital Administration and Center for Health Administration Studies, Graduate School of Business, University of Chicago, June 1979), 20–32.

13. Benson B. Roe, “The UCR Boondoggle: A Death Knell for Private Practice?” New England Journal of Medicine 305 (July 2, 1981), 41–45, and correspondence, ibid. 30 (November 19, 1981), 1287–88.

14. Louis A. Orsini, “Hospital Financing: PUBLIC ACCOUNTABILITY—The Case of Rates Prospectively Determined by State Agencies for All Patients,” Viewpoint, Health Insurance Association of America (January 1974).

15. Alan A. Stone, Mental Health and the Law: A System in Transition (Rockville, Md.: National Institute of Mental Health, 1975), 83–96; George J. Annas, The Rights of Hospital Patients (New York: Discus Books, 1975), 3–9.

16. Annas, Rights of Hospital Patients, 57–78.

17. William J. Curran, “The Patients’ Bill of Rights Becomes Law,” New England Journal of Medicine 290 (January 6, 1974), 32–33.

18. Jean Hamburger, The Power and the Frailty: The Future of Medicine and the Future of Man (New York: Macmillan, 1973), 83.

19. Sue Sprecher, “Psychosurgery Policy Soon to be Set,” Real Paper, January 21, 1978.

20. David J. Rothman, “The State as Parent: Social Policy in the Progressive Era,” in Willard Gaylin et al., Doing Good: The Limits of Benevolence (New York: Pantheon, 1978), 69–95.

21. “Medical Education in the United States, 1979–1980,” JAMA 244 (December 26, 1980), 2814. For a review of the evidence of changes among women doctors, see Naomi Bluestone, “The Future Impact of Women on American Medicine,” American Journal of Public Health 68 (August 1978), 760–63.

22. Sheryl Burt Ruzek, The Women’s Health Movement: Feminist Alternatives to Medical Control (New York: Praeger, 1978).

23. George J. Annas, “Homebirth: Autonomy vs. Safety,” Hastings Center Report 8 (August 1978), 19–20.

24. Dan Cordtz, “Change Begins in the Doctor’s Office,” Fortune (January 1970), 84.

25. Quoted in John K. Iglehart, “Prepaid Group Medical Practice Emerges as Likely Federal Approach to Health Care,” National Journal 3 (July 10, 1971), 1444.

26. For a review of the various national health insurance proposals, see Karen Davis, National Health Insurance: Benefits, Costs and Consequences (Washington, D.C.: Brookings Institution, 1975).

27. Joseph Falkson, HMOs and the Politics of Health System Reform (Chicago: American Hospital Association, 1980), 10. The following discussion draws frequently on Falkson and interviews of my own with Paul Ellwood and others while I was writing, “The Undelivered Health System,” The Public Interest, no. 42 (Winter 1976), 66–85. Some of the passages on HMOs in this chapter originally appeared in that article.

28. This was later published as Paul M. Ellwood, Jr., et al., “The Health Maintenance Strategy,” Medical Care 9 (June 1971), 291–98.

29. New York Times, February 19, 1971.

30. Carnegie Commission on Higher Education, Higher Education and the Nation’s Health (New York: McGraw-Hill, 1970).

31. New York Times, September 4, 1971.

32. “Can the A.M.A. recover from its political mistakes? Medical Economics (January 5, 1970), 27–39.

33. Walter C. Bornemeier, “Blueprint for the Future,” JAMA 217 (July 19, 1971), 324. On the AMA’s troubles in the mid-1970s, see John Carlova, “Going, Going . . . AMA’s Grip on State Societies,” Medical Economics 52 (February 3, 1975), 33–42; New York Times, June 19, 1975; and John K. Iglehart, “No More Dr. Nice Guy,” National Journal 8 (March 6, 1976), 313.

34. William J. Curran, National Survey and Analysis of Certificate of Need Laws: Health Planning and Regulation in State Legislatures (Chicago: American Hospital Association, 1973).

35. American Hospital Association, Hospital Regulation: Report of the Special Committee on the Regulatory Process (Chicago: American Hospital Association, 1977).

36. New York Times, December 16, 1972; Paul B. Ginsburg, “Inflation and the Economic Stabilization Program,” in Health: A Victim or Cause of Inflation, ed. Michael Zubkoff (New York: Prodist, 1976), 31–51.

37. Barbara Isenberg, “Physician Panels are Used Increasingly to Police Skyrocketing Costs of Treating the Aged, Needy,” Wall Street Journal, April 7, 1972.

38. George Maddaloni, “PSRO—Relationships of Organized Medicine in PSRO [sic]” in Public Control of Medical Care: History, Practices and Problems of the Federal Professional Standards Review Organization, ed. Nathan Goldfarb, Hofstra University Yearbook of Business, Series 13, vol. 2, 121–89; Judith Axler Turner, “HEW Begins Medical Review; AMA, Hospitals Mount Opposition,” National Journal Reports 6 (January 19, 1974), 90–102.

39. John K. Iglehart, “Executive-legislative Conflict Looms over Continuation of Health Care Subsidies,” National Journal 5 (May 5, 1973), 645–52; “Executive-Congressional Coalition Seeks Tighter Regulation for Medical-Services Industry,” National Journal Reports 5 (November 10, 1973), 1684–92.

40. Leonard S. Rosenfeld and Irene Rosenfeld, “National Health Planning in the United States: Prospects and Portents,” International Journal of Health Services 5 (1975), 441–53.

41. Russell B. Roth, M.D., “A Bankrupt Law,” American Medical News (November 22, 1976), 10.

42. American Hospital Association, Hospital Regulation, 15.

43. New York Times, February 8, 1974.

44. “Insuring the Nation’s Health,” Newsweek, June 3, 1974.

45. John K. Iglehart, “National Insurance Plan Tops Ways and Means Agenda,” National Journal Reports 6 (March 16, 1974), 383.

46. Alice M. Rivlin, “Agreed: Here Comes National Health Insurance,” New York Times Magazine, July 21, 1974. See also John K. Iglehart, “Consensus Forms for National Insurance Plan, Proposals Vary Widely in Scope,” National Journal Reports 5 (December 12, 1973), 1855–63; and idem, “Compromise Seems Unlikely on Three Major Insurance Plans,” National Journal Reports 6 (May 11, 1974), 700–07.

47. Executive Office of the President, Council on Wage and Price Stability, The Problem of Rising Health Care Costs (April 1976).

48. National Journal 8 (October 16, 1976), 1460.

49. John K. Iglehart, “The Rising Costs of Health Care—Something Must be Done, but What?” National Journal 8 (October 16, 1976),

50. Some of the following is taken from my article, “The Politics of Therapeutic Nihilism,” Working Papers for a New Society 3 (Summer 1976), 48–55.

51. Aaron Wildavsky, “Doing Better and Feeling Worse: The Political Pathology of Health Policy,” Daedalus 106 (Winter 1977), 105, and John H. Knowles, “The Responsibility of the Individual,” ibid., 57–80.

52. Ivan Illich, Medical Nemesis: The Expropriation of Health (New York: Patheon, 1976).

53. Victor R. Fuchs, Who Shall Live? Health, Economics and Social Choice (New York: Basic Books, 1974).

54. David E. Rogers and Robert J. Blendon, “The Changing American Health Scene: Sometimes Things Get Better,” JAMA 237 (April 18, 1977), 1710–14.

55. Karen Davis and Cathy Schoen, Health and the War on Poverty (Washington, D.C.: Brookings Institution, 1978), 26–35, 184–85, 219–24.

56. Illich, Medical Nemesis, 242.

57. Joseph A. Califano, Jr., Governing America (New York: Simon and Schuster, 1981), 97.

58. Theodore Marmor and Edward Tenner, “National Health Insurance: Canada’s Path, America’s Choice,” Challenge 20 (May–June 1977), 13–21.

59. Interview with Ben Heineman, Jr., May 1979. At the time I was writing an article for The New Republic.

60. David S. Salkever and Thomas W. Bice, “The Impact of Certificate of Need Controls on Hospital Investment,” Milbank Memorial Fund Quarterly 54 (Spring 1976), 185–214.

61. Brian Biles, Carl J. Schramm, and J. Graham Atkinson, “Hospital Cost Inflation Under State Rate Setting Programs,” New England Journal of Medicine 303 (September 18, 1980), 664–67.

62. Califano, Governing America, 166–67; Falkson, HMO’s, 184–208.

63. For two studies of the HSA’s, see Drew Altman, Richard Greene, and Harvey M. Sapolsky, Health Planning and Regulation: The Decision-Making Process (Washington, D.C.: AUPHA Press, 1981); and James A. Morone, “The Dilemma of Citizen Representation: Democracy, Planning and Bureaucracy in Local Health Politics.” (Ph.D. diss., University of Chicago, 1981).

64. Alan Blum, “Family Practice On and Off the Campus,” JAMA 245 (April 17, 1981), 1560–61.

65. U.S. Department of Health and Human Services, National Center for Health Services Research, “Who Are the Uninsured?” Data Preview 1 (1980). The statistics are for 1977–78.

66. Clark C. Havighurst, “Competition in Health Services: Overview, Issues and Answers,” Vanderbilt Law Review 34 (May 1981), 1115–78. Alain C. Enthoven, Health Plan: The Only Practical Solution to Soaring Health Costs (Reading, Mass.: Addison-Wesley, 1980). See also, Alain C. Enthoven, “How Interested Groups have Responded to a Proposal for Economic Competition in Health Services,” American Economic Review 70 (May 1980), 142–48.

67. New York Times, February 16, 1981.

Chapter Five

The Coming of the Corporation

1. “Medical Education in the United States, 1979–1980,” JAMA 244 (December 26, 1980), 2813.

2. Congress of the United States, Office of Technology Assessment, Forecast of Physician Supply and Requirements (Washington, D.C.: U.S. Government Printing Office, April 1980), 22.

3. Ibid., 7–12.

4. U.S. Dept. of Health and Human Services, Summary Report of the Graduate Medical Educational National Advisory Committee (Washington, D.C.: U.S. Government Printing Office, 1980), I:3, 67.

5. See data from an as yet unpublished study by Kathryn Langwell, with accompanying caveats, in Uwe E. Reinhardt, “The GMENAC Forecast: An Alternative View,” American Journal of Public Health 71 (October 1981), 1151–52.

6. On “burn-out” and the “retreat from patients,” see Martin R. Lipp, The Bitter Pill (New York: Harper Row, 1980), Chaps. 1, 11–15.

7. Gerald L. Glandon and Jack L. Werner, “Physicians’ Practice Experience During the Decade of the 1970s,” JAMA 244 (December 5, 1980), 2518.

8. National Center for Health Statistics, Current Estimates from the Health Interview Survey: United States–1979, Series 10, no. 136 (Hyattsville, Md.: U.S. Department of Health, Education and Welfare, 1981), 4.

9. Arthur Owens, “Working at Full Capacity? A Lot of Your Colleagues Aren’t,” Medical Economics 56 (April 2, 1979), 63 ff.

10. Jack Hadley et al., “Can Fee-for-Service Coexist with Demand Creation?” Inquiry 16 (Fall 1979), 247–58.

11. Gerald L. Glandon and Roberta J. Shapiro, “Trends in Physicians’ Incomes, Expenses and Fees: 1970–1979,” in Profile of Medical Practice 1980, ed. Gerald L. Glandon and Roberta J. Shapiro (Chicago: American Medical Association, 1980), 39–49; “Earnings Survey,” Medical Economics 57 (September 15, 1980), 120–21.

12. Harry T. Paxton, “Group Practice Jobs: Suddenly It’s a Buyer’s Market,” Medical Economics 56 (November 26, 1979), 27–34.

13. Victor R. Fuchs, “The Coming Challenge to American Physicians,” New England Journal of Medicine 304 (June 11, 1981), 1487–90.

14. For some reports on cities where doctors are plentiful, see John H. Lavin, “Doctor Surplus: Close-Up of a Town that’s Feeling the Crunch,” Medical Economics (September 29, 1980), 69–80; and Marilyn Chase, “City of Doctors: Will Surplus of M.D.’s Be Good for Patients? Look at San Francisco,” Wall Street Journal, March 13, 1980.

15. Milton I. Roemer, Jorge A. Mera, and William Shonick, “The Ecology of Group Medical Practice in the United States,” Medical Care 12 (August 1974), 627–37. On the early development of groups, see Book One, Chapter 6.

16. Jeff Charles Goldsmith, Can Hospitals Survive? The New Competitive Health Care Market (Homewood, Ill.: Dow Jones-Irwin, 1981), 35–36.

17. Ibid., 46, 136–44.

18. Paul M. Ellwood and Linda Krane Ellwein, “Physician Glut Will Force Hospitals to Look Outward,” Hospitals (January 16, 1981), 81–85.

19. Ibid., 83–84. See also Maria Salmon White and Richard A. Culbertson, “The Over-supply of Physicians: Implications for Hospital Planning,” Hospital Progress 62 (February 1981), 28–31.

20. American Medical Association, “Federal and Non-Federal Physicians, By AMA Membership, Sex and State,” November 23, 1981 (courtesy of AMA).

21. “Report of the Ad Hoc Committee on Women Physicians in Organized Medicine,” American Medical Association, 1980.

22. Interview, Chicago, Ill., January 15, 1981.

23. The term was used by both Fortune and the radical Health Policy Advisory Committtee (Health-PAC). See Harold B. Meyers, “The Medical Industrial Complex,” Fortune 81 (January 1970), 90ff, and John Ehrenreich and Barbara Ehrenreich, The American Health Empire (New York: Random House, 1970), 95–123.

24. Arnold S. Relman, “The New Medical-Industrial Complex,” New England Journal of Medicine 303 (October 23, 1980), 963–70.

25. David B. Starkweather, Hospital Mergers in the Making (Ann Arbor, Mich.: Health Administration Press, 1981), 5.

26. Donald E. L. Johnson and Vince diPaolo, “Multihospital System Survey,” Modern Healthcare 11 (April 1981), 80. Montague Brown et al., “Trends in Multihospital Systems: A Multiyear Comparison,” Health Care Management Review 6 (Fall 1980), 9–22.

Although both found about 300,000 beds in multihospital systems, the two surveys were actually measuring somewhat different statistics. The Modern Healthcare survey was limited to centrally managed systems, whereas the AHA survey included many systems whose hospitals were only loosely affiliated. However, Modern Healthcare included hospitals that were managed but not owned by chains, whereas the AHA survey seems to have been limited to owned hospitals. These differences in definition apparently cancelled themselves out in the total beds counted. However, they yield different estimates of the composition of the multihospital sector since the for-profits are more often centrally managed and since they also account for most of the hospitals under contract management.

27. Brown et al., “Trends in Multihospital Systems,” 21.

28. Johnson and diPaolo, “Multihospital System Survey,” 96.

29. “Management Company Expansion Spurs Investor-Owned Growth,” Federation of American Hospitals Review 14 (November–December 1981), 54–55.

30. Marilyn Mannisto, “Hospital Management Companies Expand Foreign Operations,” Hospitals 55 (February 1, 1981), 52–56. Hospital Corporation of America, Annual Report, 1980.

31. Gwen Kinkead, “Humana’s Hard-Sell Hospitals,” Fortune (November 17, 1980), 68–81.

32. American Hospital Association, Hospital Statistics, 1981 (Chicago; American Hospital Association, 1981), 6–7; Johnson and diPaolo, “Multihospital System Survey,” 96; Bruce Steinwald and Duncan Neuhauser, “The Role of the Proprietary Hospital,” Law and Contemporary Problems 35 (Autumn 1970), 824.

33. Janet Bly and William P. Pierskalla, “Religious Systems’ Local Boards Have More Decision-making Power,” Modern Healthcare 11 (April 1981), 88–89, 91. The AHA survey, which classified systems according to degree of centralization, found that “managed” systems accounted for 21 percent of all community hospital beds, while “affiliated” systems accounted for only 10 percent. The growth in multihospital systems between 1975 and 1979 had occurred primarily in the managed systems. Brown et al., “Trends in Multihospital Systems,” 15–16.

34. Bly and Pierskalla, “Religious Systems’ Local Boards Have More Decision-making Power.” On control by inside directors, see Edward Herman, Corporate Power, Corporate Control (New York: Cambridge University Press, 1981).

Managerial control does not necessarily mean, as some theorists of the managerial revolution argue, that the companies are more devoted to growth than to profits. The inside directors typically hold substantial investments in company stock; their success as managers depends on keeping up the company’s price-earnings ratio. Consequently, even when managers control corporations, they are no less devoted to ownership interests.

35. Johnson and diPaolo, “Multihospital System Survey.”

36. Ibid., 81.

37. Robert Derzon, Lawrence S. Lewin, and J. Michael Watt, “Not-for-profit Chains Share in Multihospital System Boom,” Hospitals (May 16, 1981), 65–71.

38. Starkweather, Hospital Mergers, 12–17.

39. Thomas F. Treat, “The Performance of Merging Hospitals,” Medical Care 14 (March 1976), 199–209.

40. David B. Starkweather, “U.S. Hospitals: Corporate Concentration vs. Local Community Control,” Public Affairs Report, Bulletin of the Institute of Governmental Studies, University of California, Berkeley, 22 (April 1981), 6.

41. Lawrence S. Lewin, Robert A. Derzon, and Rhea Margulies, “Investor-owneds and Nonprofits Differ in Economic Performance,” Hospitals (July 1, 1981), 52–58. For some weak evidence favoring for-profit hospitals, see Carson W. Bays, “Cost Comparisons of Forprofit and Nonprofit Hospitals,” Social Science and Medicine 13C (December 1979), 219–25.

42. Brown et al., “Trends in Multihospital Systems,” 17–20.

43. S. David Pomrinse, “Voluntary Planning Forestalls Excessive Competition, Regulation,” Hospital Progress 62 (March 1981), 37.

44. Derzon, Lewin, and Watt, “Not-for-profit Chains,” 66–67.

45. Vince diPaolo, “Gloomy Economic Prospects Will Spur Hospital Acquisition Market,” Modern Healthcare 11 (January 1981), 70.

46. Starkweather, “U.S. Hospitals: Corporate Concentration vs. Community Control,” 6.

47. Barry Bluestone and Bennett Harrison, “Why Corporations Close Profitable Plants,” Working Papers for a New Society 7 (June 1980), 15–23.

48. Kinkead, “Humana’s Hard-Sell Hospitals,” 70.

49. Ibid., 81.

50. Montague Brown, “Systems Diversify with Ventures Outside the Hospital,” Hospitals (April 1, 1981), 147–53.

51. Donald E. L. Johnson, “Nonprofit’s Taxed Unit Can Sell Stock,” Modern Healthcare 11 (June 1981), 90–92. Sally Berger, “Innovative Backround Triggered Trustees’ Interest in Conglomerate,” Modern Healthcare 11 (February 1981), 108, 110.

52. Sheila L. Simler, “Leading Hospitals Restructure, Even Though Benefits May Be Short-lived,” Modern Healthcare 11 (March 1981), 68–73.

53. Dan Ruck, “Young System Races into Growth Program,” Modern Healthcare 11 (June 1981), 60–64.

54. Paul A. Teslow, quoted in Donald E.L. Johnson, “Nonprofits Will Merge, Add Services in the 1980’s,” Modern Healthcare 11 (May 1981), 66.

55. Esther Fritz Kuntz, “Nursing Home Chains Buy Up Smaller Groups,” Modern Healthcare 11 (June 1981), 68–74; Relman, “New Medical-Industrial Complex,” 964.

56. Eleanor Siegel, “Emergence of Emergicenters,” Boston Globe, June 8, 1981. Howard Eisenberg, “‘Convenience Clinics’: Your Newest Rival for Patients?” Medical Economics (November 24 1980), 71–84; Linda A. Burns and Mindy S. Ferber, “Freestanding Emergency Care Centers Create Public Policy Issues,” Hospitals (May 16, 1981), 73–76.

57. Starkweather, “U.S. Hospitals: Corporate Concentration vs. Local Community Control,” 1.

58. Richard L. Johnson, “Health Care 2000 A.D.: The Impact of Conglomerates,” Hospital Progress 62 (April 1981), 48–53.

59. David A. Stockman, “Premises for a Medical Market Place: A Neoconservative’s Vision of How to Transform the Health System,” Health Affairs 1 (Winter 1981), 16.

60. For a scrupulous analysis of the evidence, see Harold S. Luft, Health Maintenance Organizations: Dimensions of Performance (New York: Wiley, 1981). For some further evidence of HMOs competitive impact, see Jon B. Christianson, “The Impact of HMOs: Evidence and Research Issues,” Journal of Health Politics, Policy and Law 5 (Summer 1980), 354–57.

61. Stephen Shortell, “The Researcher’s View,” in Hospitals in the 1980s: Nine Views (Chicago: American Hospital Association, 1977).

62. Alfred Chandler, The Visible Hand: The Managerial Revolution in American Business (Cambridge: Harvard University Press, 1977), 315.

63. Daniel S. Greenberg, “Renal Politics,” New England Journal of Medicine 298 (June 22, 1978), 1427–28; medical professor quoted in John K. Iglehart, “Kidney Treatment Problem Readies HEW for National Health Insurance,” National Journal (June 26, 1976), 900.

64. Gina Bari Kolata, “NMC Thrives Selling Dialysis,” Science 208 (April 25, 1980), 379–82.

65. Paul W. Earle, “Business Coalitions—A New Approach to Health Care Cost Containment.” (American Medical Association, January 1982); for two reports on business views, see John Iglehart, “Health Care and American Business,” New England Journal of Medicine 306 (January 14, 1982), 120–24, and idem, “Drawing the Lines for the Debate on Competition,” New England Journal of Medicine 305 (July 30, 1981), 291–96. For a skeptical view that business is not really that much interested in health costs, see Harvey M. Sapolsky, “Corporate Attitudes toward Health Care Costs,” Milbank Memorial Fund Quarterly 59 (Fall 1981), 561–85.

66. American Medical Association, SMS Report [Sociomedical Monitoring System] (February 1982), 1.

67. Goldsmith, Can Hospitals Survive?, 33–34.

68. Interview, January 15, 1982.

69. Clark Havighurst, “Professional Restraints on Innovation in Health Care Financing,” Duke Law Journal (May 1978), 303–87.

70. Kinkhead, “Humana’s Hard-Sell Hospitals,” 76.

71. Johnson, “Health Care 2000 A.D,” 49–50.

72. Freidson distinguishes between physicians’ “technical” autonomy in defining the “content” of their work and their social and economic autonomy in controlling the organization or “terms” of work. Eliot Freidson, Profession of Medicine (New York: Dodd, Mead, 1970), 373. This distinction may become increasingly untenable as corporate organizations make the technical standards an object of modification.