The Provision of Healthcare Amidst Macro Secular

Trends within the Unfolding Hegelian Dialectic

Duane C. McBride PhD

Professor of Sociology
Behavioral Sciences Department
Andrews University
 Key Theme
Learning Objectives:

 Examine the social trends and events that surround health care
policy.

 Recognize that health care policy in any time and place exists in the
broader context of social/political issue dialectics.

 Examine potential future policies as the social policy dialectic of the

trend of our times unfolds.
 Background
• Masters Degree in Industrial Organization and PhD in Sociology.

• Chairing and serving on Hospital Boards in four states and local Public
Health Board almost all of adult life beginning in 1978 to current.

• Conducted research on health service needs and utilization for drug

abusers and neighborhood comparison group.

• Served on and Chaired NIH grant review committees for about 40 years
that generally include grants focused on health service access.

• Teach or taught Health Care Management in AU School of Business, Public

Health Courses, Medical Sociology and Demography.
 Brief Overview of Western Health Care Policy
• The first modern health access program was created by the notable radical Otto Von
Bismarck – as an attempt to stop the revolutionary movement of the Socialists in
Germany – a stake in the system.

• It was called Sickness Insurance and was financed by employers and workers with
government subsidies if needed.

• The focus was on private insurance not national health care paid for by general taxation
or government owned hospitals – kind of set the policy framework for the U.S.

• He saw his program as a synthesis between the Socialists/Marxists call for public
ownership and the old Prussian aristocracy views of peasants as mere know nothing
cogs.

• The purpose was to stop the Socialist/Marxist revolution and reduce out migration and
it tended to work.
 Four Basic Models of Health Care
• The Bismarck Model – compulsory private insurance paid for by both employers and employees with
price controls for all parts of the system and it is non-profit – and government subsides to purchase
insurance for low income – Origins in the 1880’s – Germany
http://healthmatters4.blogspot.com/2011/01/bismarck-model.html

• The Beveridge Model – The founder of the British system of National Health Insurance. This model
involves government control and generally ownership of the system with health care providers
government employees and government owned facilities – William Beveridge was asked by Winston
Churchill to develop a health care plan in 1942 – he did not like the plan, but wildly popular and
implemented after WWII in 1948– It is truly Socialized Medicine -- Great Britain, Spain, Scandinavia, New
Zealand, Cuba http://healthmatters4.blogspot.com/2010/12/beveridge-model.html

• The National Health Insurance Model – Kind of a single payer system – the government pays the costs,
but private hospitals and physicians provide care and are paid by government insurance through general
taxation – the Medical Care Act of 1968 -- Canada, South Korea, Taiwan -
http://www.historymuseum.ca/cmc/exhibitions/hist/medicare/medic-5h23e.shtml

• The Out of Pocket Model – Health care as a market transaction – common in most of the world – India,
and in many ways China has moved toward this model recently (that is why trends may not be linear) and
the U.S. has many of these elements – The foundation of this model might be the strain of Libertarianism
in U.S. Culture.

• U.S. health care is a mixture of all of the above –

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3596027/
 Dialectical Forces in U.S. that Impact Health Policy

• Libertarianism – Don’t Tread on me – small government – individual responsibility

– John Stuart Mill -- http://www.sparknotes.com/philosophy/mill/section3.rhtml

• Mercantilism – An almost unbridled faith in the free market to self-correct --

https://www.adamsmith.org/the-wealth-of-nations/

• Communitarianism/Humanism – We are our brothers keeper and health care may

be a civil right.

• The Kingdom of God – “Universalistic egalitarianism, from which sprang the ideals
of freedom and a collective life in solidarity, the autonomous conduct of life and
emancipation, the individual morality of conscience, human rights and
democracy, is the direct legacy of the Judaic ethic of justice (responsibility) and
the Christian ethic of love (concern)”. Time of Transitions – Habermas” Health
Care as a Sacrament
 Trends and Dialectics in the Development of
U.S. Health Care Policy
• The Mercantile Era – Prior to the Flexner Report in 1910 there was little
regulation of medical provision. It was pretty much an open market for
anyone who called themselves a physician and for powerful medications --
http://addictionscience.net/ASNpreprohibition.htm

• The Social Reform Era and The Flexner Report – While the AMA was
founded in 1847 and the first “real” medical school, Johns Hopkins, was
founded in 1893, it was the Flexner Report that really established the
profession and license requirements adopted by states. Numbers of
physicians reduced; costs increased; racist elements in the report.
http://archive.carnegiefoundation.org/pdfs/elibrary/Carnegie_Flexner_Report.pdf

• This report needs to be seen in the context of wider social reforms from
the WCTU to Food and Drugs (The Jungle by Upton Sinclair) -- http://www.online-
literature.com/upton_sinclair/jungle/
 The Fee for Service Era
• Until 1929 the large majority of health care costs were paid by private individuals
– there was real AMA opposition to prepaid Bismarkian Sickness Insurance
(opposition to fraternal lodge payments).

• The poor were often cared for in public county based hospitals --
https://essentialhospitals.org/about-americas-essential-hospitals/history-of-public-hospitals-in-the-united-states/emergence-of-public-hospitals-
1860-1930/

• But, in a 1928, report the AMA began recognizing that costs were high and a high
proportion of the population was not getting needed care.

• The Great Depression brought about a serious crisis in the fee for service model
with low rates of utilization of hospitals particularly.

• The Depression Era brought the first “insurance” type of programs. Dallas
teachers and Baylor Hospital
• https://www.westandfirm.org/docs/Gorman-01.pdf
 A Nod Toward Bismarck
• During the 1930’s Hospitals, to address Depression Era issues, began to offer Blue Cross (note the religious
imagery). These were hospital based plans, non-profit and non-taxable.

• It was the economic loss of the depression that drove hospitals and physicians to the Bismarck model.

• By 1946 we had Blue Shield for prepaid physician services.

• The Price Stabilization Act of 1942, did not allow wage increases but allowed increased benefits and health
insurance was the major benefit – In 1943 an administrative rule was promulgated that said these were tax
deductible for companies and tax free for employees. This became a major drive in industry hiring and union
contracts.

• In 1939, 6% of population had private insurance, by the mid-1960’s a majority of the population had some
type of private insurance.

• And Private Insurance was paying on a cost + basis until the 1980’s – causes high overhead, corporate
proliferation, and massive inefficiencies

• It is important to note that anti-German and anti-communism in this era meant no compulsory insurance;
private or public.
• https://www.westandfirm.org/docs/Gorman-01.pdf
 Toward The Bismarck Plan in the U.S.
• A key component of the Bismarck Plan is private insurance mandated by
the federal government.
• The Era was the radical 1960’s and 1970’s with major moves toward
National Health Insurance model (single payer) that was deeply associated
with the Democrat Party.
 To counter the Democrats, the noted radical, President Nixon proposed a
full Bismarck plan in 1971 and 1974 that included: http://ihpi.umich.edu/news/nixoncare-
vs-obamacare-u-m-team-compares-rhetoric-reality-two-health-plans
1. All employers must provide health insurance to full time workers
2. Guaranteed Health benefits
3. Government backed insurance for part time /self employed
Federal subsides to help afford it.
4. Expand Medicare type program to replace Medicaid for those who
cannot afford or access employee based insurance (so a bit
Beveridge).
 Ted Kennedy strongly opposed this plan and it died; supposedly before he
died Kennedy expressed deep regret he did not accept this plan.
 The Bismarck Plan cont’d – Hillary Care
• The Health Security Act of 1993 (Hillary care) https://www.congress.gov/bill/103rd-congress/house-
bill/3600/text

• This was a major National Health Insurance Proposal by President

Clinton and he ran on this.

• Mandated coverage for businesses with 2,000 or more employees,

offered federal subsidies to those not employed or in smaller firms.

• Must cover pre-existing conditions and preventive care.

• Very strong opposition from Libertarians, Conservatives and the

health care industry and the proposal died in processing.
 A Nod Toward The Beveridge Model
• The first federal government owned hospital was for Veterans and opened in
1811 as the U.S. Naval Home for Veterans. After Civil War many more. VA really
organized in 1930 and took over 64 hospital dedicated to Veterans.
https://answers.yahoo.com/question/index?qid=20091106050451AA7bVRD

• The Veterans Health Administration is the largest integrated health care system in
the United States, providing care at 1,233 health care facilities, including 168 VA
Medical Centers and 1,053 outpatient sites of care of varying complexity (VHA
outpatient clinics), serving more than 8.9 million Veterans each year.
https://www.va.gov/health/findcare.asp

• Indian Health Service and Public Heath Service Hospitals for Merchant Marines
and drug addicts. https://en.wikipedia.org/wiki/United_States_Public_Health_Service

• U.S. culture more comfortable with local government hospitals and limited
federal involvement and only for those in national federal service or dependents
– strong steam of anti-communism, the red scare and Libertarianism.
A Nod Toward National Health Insurance
• Theodore Roosevelt’s Bull Moose part had some vague statements that seemed
to endorse national health Insurance and even income replacement guaranteed
by and paid for by the government. --
http://www.slate.com/articles/news_and_politics/explainer/2010/03/obama_says_theodore_roosevelt_lobbied_for_health_care_reform_.html

• It was a Democrat Harry Truman that first formally proposed National Health
Insurance – On December 19, 1945 he proposed a very comprehensive detailed
national health care policy involving federal funds to address physician training,
hospital construction and national federal quality standards and federal national
health insurance paid for by patients and subsidized by the federal government. It
was voluntary but was designed to address those not in work based plans.
https://www.trumanlibrary.org/anniversaries/healthprogram.htm

• The AMA went ballistically aghast at the Socialist/Communist Truman plan and it
went now where.
 A Type of National Health Insurance
• The 1960’s was a pretty radical era in the U.S. with rapid trends toward
expansion of Federal Government Power and Responsibility from the
Warren Courts application of the federal constitution of the Bill of Rights to
the states to racial integration and health care insurance.

• Medicaid and Medicare in 1965 (note differences) by Lyndon Johnson and

an expanded part of Social Security – opposed by the AMA who hired
Ronald Reagan to record opposition. http://voices.washingtonpost.com/ezra-
klein/2009/06/why_the_american_medical_assoc.html

• Medicare was a cost + pass through system; one had to document costs
and one was paid – resulted in major increase in costs and physicians and
hospitals came to realize that they really benefited from this!
 The Conservative Bismarck Plan
• One of the more interesting Bismarckian proposals was made by the
Heritage Foundation in 1989.
• It was very critical of employer based plans and the cost pass through plans
as inflation drivers.
• Very strong belief in the free market and it would work for health care if:
• Every household was required by law to purchase health insurance.
1. health insurance would be taxable income
2. tax credits to off-set this based on % income
3. coverage for older dependent children
4. consumers would buy insurance and shopping would drive costs down
5. subsidized risk pools (likely state government)
6. Medicare becomes a voucher system to encourage consumer cost
control.
7. use of retirement funds to purchase long term care insurance.
• http://www.heritage.org/social-security/report/assuring-affordable-health-care-all-americans

This was seen as both consistent with Libertarianism and because of

mandated insurance was seen as antithical to Libertarianism.
 Romney’s Bismarck Care Plan
• George Romney (whose father had proposed national health
insurance when he ran for President) developed a health care plan for
Massachusetts where he was governor; it’s core was:
1. Mandated employer provided health care for 10 more employees.
2. Expanded Medicaid at 150% of poverty level
3. Coverage of dependent children up to 26
4. Maximum out of pocket expenditures
It did reduce non-insured and has been positively evaluated and it is
the father of Obama Care! But conservatives are more OK with state
innovations; not Federal Mandates.
 A Time Out – Health Care Issues in 2008
• Bankruptcies – Data suggest that in 2007, about 60% of all bankruptcies health
care bills play a major role and it was highest among young families (under 45).
http://www.amjmed.com/article/S0002-9343(09)00404-5/fulltext

• The U.S. Census Bureau estimated that over 16% of the U.S. population did not
have health insurance – about 47 million or so.

• Health care costs were rising rapidly in terms of individual premiums and percent
of GDP – from 5% in 1960 to about 17% today and the U.S. leads the world in this.
https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/HistoricalNHEPaper.pdf

• We had moved away from cost + pass through to cost containment boards, DRGs
and deep discounting, but payers still wanted more cuts with declining
reimbursement and more co-pay; but still a fee for service system.
• Our health data was about the worse in the developed world in terms of infant
mortality, life expectancy, and obesity.
• We have come to realize that zip code and demography are destiny.
 Health Care Cost Increases
https://www.forbes.com/sites/mikepatton/2015/06/29/u-s-health-care-costs-rise-faster-than-inflation/#237b69d66fa1
 The Macro Trends and Dialectics in the Debate --
https://www.google.com/search?q=key+drivers+of+healthcare+costs&oq=&aqs=chrome.1.69i58j0i66j5i66l4.52311j0j4&sourc
eid=chrome&ie=UTF-8 --- https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4638261/

• Cost and what drives it:

1. Physician and Hospital costs – unit costs are the worlds highest.
2. Drug costs – again the worlds highest
3. Technologies – patient and care giver expectations
4. Fragmented care – unintegrated data and delivery systems
5. Patients have very limited cost consideration because if insurance covers,
why bother about it.
6. Fee for Service – every little service is costed out and at a very high
price.
7. Overhead of insurance types, forms and requirements
8. Unhealthy behaviors and cultural context are major drivers
9. Care for chronic conditions (not end of life)
10. The “for profit” motive
11. A bit of defensive medicine – about 2.4% https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3048809/
 More Trends and Dialectics
• Some hypocrisies in the Debate
1. Libertarians – no mandates, not our brothers keeper, individual
responsibility and consequences but take me to the ER.
2. President Reagan and the requirement to provide free ER care --
The Emergency Medical Treatment and Labor Act (EMTALA) – it does
not at all address costs or basic reasons for health problems/status.
https://www.acep.org/content.aspx?id=25936

3. Republican generally denial that the ACA is based on Nixon, Romney

and the Heritage Foundation.
4. No one wants to address costs – every party is too enmeshed in
profiting from costs
5. The Hastert Rule -- http://politicaldictionary.com/words/hastert-rule/
 The Dialectic of Perceptions
• Don’t Tread on me -- I will go to jail before I am made to buy insurance – individual
responsibility and consequences.

• Free the market place -- And costs will be controlled, low cost plans will emerge and all
will be well if people just behave responsibility.

• Health Care is a Civil Right and a Religious Duty -- We are our brothers keeper and the
Kingdom of God is at hand and it’s a sacrament.

• It is a business and a fee for service and the right to bill – at core we are an
entrepreneurial society

• System consolidation and local system protection – we like to think and act locally not
comfortable with federal mandates.

• The government always messes up service/product provision – “Keep your government

hands off my Medicare”
 The Affordable Care Act (Obama Care)
• At core the ACA:
1. All insurance plans must provide 10 essential health benefits.
2. Cannot be denied coverage (pre-existing conditions).
3. No lifetime cap on benefits.
4. Expanded Medicaid to 133% of federal poverty definition.
5. Dependent Children can be covered to 26.
6. Individual Mandate – tax consequences – but really low.
7. Integrated health data and systems.

8. Some focus on prevention – no co-pay for screenings

9. Move toward outcome based payments (mostly in next few
years)
 Major Criticisms
• Most severe Critical points:
1. One size fits all.
2. Americans hate mandates.
3. Does not really address some core costs like drugs and defensive
medicine.
4. Another entitlement and federal overreach.

5. Did not sufficiently address upstream social cause issues.

6. Massive transfer of wealth from younger to older generations
 What ACA Did
• Changed the conversation – moved toward a sense of civil entitlement.

• Bankruptcies from health care costs down.

• Fewer uninsured more access to health care.

• More resources for prevention and health care provision with removal of caps,
pre-existing coverage and up to 26.

• Significant move toward population health.

• Cost rises are a bit lower than historical rate increases.

• Move toward integrated systems organizational and electronic.

• Increased social conflict on the meaning of and right to health care.

 Major Failures
• Unable to do national Medicaid expansion.

• Consequences too low to move younger healthier to the insurance market.

• Only the most sick entered the individual market place.

• Some full time workers may have been moved to part time.

• Increased social conflict in some bizarre ways; opposition to ACA seems to

be almost the sole reason for the Republican Party existence.

• It is very cumbersome!
 So what to do in the Future
• To a large extent we are our brothers keeper – Obama has won the debate and we’d
make more progress if all parties accepted that. What has won:
1. Must deal with pre-existing conditions.
2. Must deal with the poor – No one is proposing letting them die
in the parking lot, but limited consensus as to how.
3. Must deal with dependent adult children.
4. Must deal with chronic conditions from diabetes to drug abuse and their costs.
5. The debate is the mechanisms to help ensure access (tax credits – the Heritage
Foundation, direct subsidies, broader insurance pools, subsides
high risk pools, insurance across state lines and the extent of all of this).
6. Demography and zip code are destiny, must address cultural patterns that destroy
health.
7. Really need more primary care providers (from physicians to nurses).
8. We will very likely remain a bizarre mixture.
 So What is the Future Amidst the Macro Trends and Dialectic
• Population Health – Per capita organizational payment (bypassing insurance company), addressing zip code as destiny vs US
individualism and costs of for a time prevention costs and chronic disease costs.

• Whole person health – vs don’t tread on me and non-compliance.

• Consumer based – The internet and doctor/hospital ratings vs professional expertise.

• Outcome based (ACA moving in this direction) – vs. bad health choices.

• Prevention (part of whole person and population based health) – libertarianism and conspiracy theories – we are spending
less now than in the past and lower vaccination rates among white upper middle class.

• Chronic Disease Management (ibid) – vs non-compliance.

• Integrated systems data system – My Chart – vs. system resistance/preferences.

• Large Integrated Delivery Systems -- (Kaiser and Mayo Models) -- vs. private entrepreneur.

• Mandates will be complex – don’t tread on me.

• Hypocrisy -- will likely not end.

• Often wrong -- Who knows what will happened this month in Congress – never expected Trump to win.
 Some Questions
• Who would tend to see access to health care as a civil right – a right
of citizenship?
A. The Heritage Foundation
B. Otto Von Bismarck
C. Donald Trump