Poor People's Medicine: Medicaid and American Charity Care since 1965 / Edition 1

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Overview


Poor People’s Medicine is a detailed history of Medicaid since its beginning in 1965. Federally aided and state-operated, Medicaid is the single most important source of medical care for the poorest citizens of the United States. From acute hospitalization to long-term nursing-home care, the nation’s Medicaid programs pay virtually the entire cost of physician treatment, medical equipment, and prescription pharmaceuticals for the millions of Americans who fall within government-mandated eligibility guidelines. The product of four decades of contention over the role of government in the provision of health care, some of today’s Medicaid programs are equal to private health plans in offering coordinated, high-quality medical care, while others offer little more than bare-bones coverage to their impoverished beneficiaries.

Starting with a brief overview of the history of charity medical care, Jonathan Engel presents the debates surrounding Medicaid’s creation and the compromises struck to allow federal funding of the nascent programs. He traces the development of Medicaid through the decades, as various states attempted to both enlarge the programs and more finely tailor them to their intended targets. At the same time, he describes how these new programs affected existing institutions and initiatives such as public hospitals, community clinics, and private pro bono clinical efforts. Along the way, Engel recounts the many political battles waged over Medicaid, particularly in relation to larger discussions about comprehensive health care and social welfare reform. Poor People’s Medicine is an invaluable resource for understanding the evolution and present state of programs to deliver health care to America’s poor.

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Editorial Reviews

From the Publisher

“As debate about Medicaid’s future rages in Washington, D.C., and state capitols around the country, Jonathan Engel’s book provides much-needed perspective on how our nation has provided health care to the poor over the years. As he shows, second-tier medicine for the poor and uninsured has been a stable feature of the American health care system, and efforts to close the gap between rich and poor cannot but face an uphill battle.”—Alan Weil, Executive Director, National Academy for State Health Policy

“Medicaid is a vital program, and providing medical care to the poor is a critical issue in contemporary health policy, but there long has been a gap between Medicaid’s significance and academic attention to its historical evolution. There has not been nearly enough scholarship of the sort represented in Poor People’s Medicine, scholarship that sketches out the history of Medicaid, key changes in the program, and, crucially, the development of other medical care programs for the poor.”—Jonathan Oberlander, coeditor of The Social Medicine Reader, second edition

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Product Details

  • ISBN-13: 9780822336952
  • Publisher: Duke University Press Books
  • Publication date: 2/28/2006
  • Edition description: New Edition
  • Edition number: 1
  • Pages: 344
  • Product dimensions: 6.00 (w) x 9.20 (h) x 0.80 (d)

Meet the Author

Jonathan Engel is Associate Professor and Chair of Public and Healthcare Administration at Seton Hall University.

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Read an Excerpt

Poor People's Medicine

Medicaid and American Charity Care since 1965
By JONATHAN ENGEL

DUKE UNIVERSITY PRESS

Copyright © 2006 Duke University Press
All right reserved.

ISBN: 978-0-8223-3683-9


Chapter One

Antecedents: Poverty and Early Poverty Care Programs

Health and Health Care in the United States in the Early 1960s

By 1964 America was in the throes of its "golden days" of medicine. Death rates due to infection, heart disease, and stroke had fallen rapidly since the 1940s, and even such intractable problems as cancer and severe mental illness were viewed as potentially treatable by an optimistic medical community. Tranquilizers without severe side effects were promising to salve the tension and anomie inherent in a competitive society, and nascent hormone therapies offered the promise of new treatments for congenital abnormalities and growth deficiencies. New surgical techniques were being developed to transplant organs, reattach limbs, and excise brain tumors. Life magazine wrote at the time, "With ingenious substitutes for human organs and bold experiments in transplants, man becomes master mechanic, on himself." The promise of scientific medicine, as envisioned by medical soothsayers such as Abraham Flexner, William Osler, and Harvey Cushing in the early decades of thecentury, was being fulfilled.

Medicine had grown tremendously in the two decades since the end of the Second World War. By 1964 health care exceeded the nation's transportation sector both in its number of employees and in raw revenues generated, which at $33 billion were triple their level in 1949, representing almost 6 percent of gross national product and ranking health care sixth or seventh among the nation's industries (depending on accounting techniques). Investment in the nation's hospital infrastructure alone was well over $20 billion. Over the previous five years, 1,700 hospital construction projects had been approved, adding 72,000 beds to hospitals and health clinics. The nation's biomedical research budget had grown from $88 million in 1947 to $1.6 billion in 1964, an increase of nearly twentyfold.

The increase in medical efficacy had saved the nation millions of dollars in lost labor and productivity. The federal government estimated that the annual cost of malaria to the thirteen southern states had dropped from the pre-war level of half a billion dollars to $50,000. Similarly, the Public Health Service recorded a decline in the incidence of polio from 1,000 cases a week to fewer than a dozen. Inoculation programs and pharmaceutical regimens had halved the man-hours lost to industry over the past decade, and reductions in sickness and accident payments ranged from 25 to 60 percent. "Health is our best investment," the surgeon general, Luther Terry, proclaimed to an audience in Detroit that May. "Thus we will increasingly charge the debits of premature death, prolonged disability, and high costs of care to the assets of improved health, greater economic efficiency, and enjoyment of life."

The miracle of modern health care did not come cheap. The combined cost of physician and hospital services, prescription drugs, medical devices, research, and convalescence was over $170 per year per capita. A fourth of this was paid for by government-particularly research costs, medical care for the elderly poor, and hospitalization costs for the mentally ill-but three fourths of it was born by private individuals, corporate employers, and unions. For some services, such as hospital care, government paid for a bit more, while for other services, such as primary physician care, the burden fell more to the private sector, but the result in any event was the need for a substantial commitment by private citizens to fund their own care through cash payments, insurance premiums, wage reductions, or membership fees in prepaid health plans. While this health care balance between government and private citizen had existed for decades, the increasing efficiency of medicine made the opportunity cost of forfeiting private care greater, while the increasing cost of providing medical care made the cash sacrifice of obtaining it more acute.

More than any other sector of health care, hospital care had grown in importance and cost, from 18 percent of the nation's health expenditures in 1929 to 33 percent by 1962, while almost all other health expenditures had declined as fractions of total health care expenditures. New surgical techniques, breakthroughs in trauma care, wound stabilization, transplants, and new life-sustaining therapies for chronic patients demanded financial commitments far greater than what most hospitals could hope to raise through traditional sources of philanthropy and government largesse. Philanthropy had declined to 3 percent of the nation's hospital budget, and state and federal hospital subsidy programs could make up less than a third of the remainder; 67 percent of all funds spent on hospitalization, whether for capital investment or operating reimbursement, needed to come directly from patient billings, and this share was growing.

Hospital costs, unlike physician costs, were highly volatile for any given individual. While in any one year the majority of Americans would spend no money at all on hospital costs, for those who did the bill could run to thousands of dollars. The hospital bill for a significant surgical procedure such as a transplant or removal of a brain tumor exceeded the annual income of most American families. To distribute the risk of a catastrophic hospital bill over many years, or even over an entire lifetime, an increasing number of Americans had turned to private hospital insurance (and to physician insurance as well) in the decades after the Second World War. Insurance allowed for more predictable financial planning as well as a distribution of catastrophic risk over an entire labor force or community. And because a high proportion of all hospital insurance was provided by employers in the 1960s, its cost was psychologically easier to bear, as most American workers believed that more generous fringe benefits did not bring about a commensurate reduction in salary.

Private hospital insurance had existed in the United States since the late 1920s (when the first mutual Blue Cross plans were established) but had not become popular until the war years, when companies began looking for alternative forms of compensation to lure qualified workers during the tight wartime labor markets. When GIs returned from the fighting, American companies had enthusiastically expanded their insurance offerings, pleased with the benefit's lure to the most dependable and sought-after workers-stable family men. In the decade and a half after the war's end, the portion of Americans holding some type of hospital insurance policy grew from 22 to 74 percent-the fastest penetration of any type of financial instrument in the nation's history. By 1965 over 80 percent of Americans in the prime of their working lives (ages 35 to 65) were covered, and over 70 percent of all children were covered as well. The single group with the lowest incidence of coverage, the elderly, still claimed a 63 percent coverage rate, and the poorest of the elderly, those least likely to be covered under a corporate pension plan and least able to afford private coverage, had benefited from the recently passed Kerr-Mills legislation, which offered medical subsidies for the impoverished aged.

Studies conducted in the 1950s and 1960s indicated that hospital insurance coverage resulted in significantly better access to care and more successful outcomes from illness and trauma. As far back as 1952, the President's Commission on the Health Needs of the Nation reported that uninsured Americans entered the hospital in significantly higher numbers than insured Americans did, and once admitted stayed for substantially longer periods. Those covered by the most comprehensive policies, such as those of the Kaiser Foundation, the Group Health Association in Washington, and the Group Health Cooperative in Seattle, posted hospital admission rates of 80 to 90 per 1,000 per year, as compared to the general population's rate of 110 admissions per 1,000. Members of the cooperative plan stayed in the hospital an average of 6.4 days, while the general population stayed for 10.6. While Blue Cross patients were admitted at a slightly higher rate (122 per thousand), their lengths of stay were much closer to those of the cooperative plan members-7.4 days per admission. As a result, cooperative plan members stayed in the hospital for fewer than 600 days per thousand members per year, while the general population stayed for 1,165. Enrollees in the Blue Cross plan were in between, with 888 days per thousand per year. While all these numbers had risen modestly by 1961, the magnitude of the discrepancy remained.

As hospital insurance became more important to Americans in planning for and financing their health care, those who lacked insurance lagged behind their fellow citizens in their ability to gain access to the best physicians and hospitals and to maintain their state of health. In 1932 the Committee on the Costs of Medical Care (CCMC) had reported that access to quality medical care was highly correlated with income, but the truly poor had always managed to find alternative means of gaining entry to the system. Public hospitals and clinics, pro bono service by doctors and dentists, and community-based philanthropy had historically minimized the disparity in access to health care between rich and poor. (The CCMC had found, oddly, that the very poorest group of Americans used doctors and hospitals as frequently as the wealthiest group, because of the availability of charity care. For all other groups, income dictated medical purchasing.) But the rise of hospital insurance undermined the existing mechanisms for equalizing access to medical care. By 1965 the discrepancies were obvious and stark. While only 13 percent of households with an annual income of $5,000 or more lacked hospital insurance, almost 40 percent of households earning under $5,000 so lacked. And for children of the poor, the situation was worse. In a nation in which over 80 percent of the actively employed had hospital insurance by 1965, only 22 percent of children living in households with an annual income under $3,000 had the same. "Will the health system touch all, and not just the solvent and initiative-takers?," asked the public health scholar Charlotte Muller that spring. Given the already described health advantages associated with hospital coverage, the wealth gap in health insurance loomed ominously over a nation which was becoming more concerned with social inequity and the persistence of endemic poverty.

The Poor

Who were the poor in 1965? One common sociological index was that families or households had "inadequate income" if their current earnings left them unable to meet at least 90 percent of their basic budget requirements (food, housing, clothing, health care, transportation). By this criterion 20 percent of American households were poor. But the line was hazy, and needed to be adjusted for regional cost-of-living differences, habits of living, unique expenses, and household standards. Another approach was to look at median family income. The median after-tax family income in 1965 was $5,906, of which $5,390 was spent on current consumption; 12 percent of households had incomes under $2,000, and another 8.5 percent had incomes between $2,000 and $3,000, leaving just over a fifth of American families below the poverty line of $3,000 set somewhat arbitrarily by the U.S. Department of Labor. A third approach was based on family food expenses, which the Department of Agriculture suggested should consume no more than a third of household income. By this measure, again, about a fifth of American households lived in poverty. According to still another measure, the poor were the one sixth of American households which owed no income tax in 1963 because their household income fell below the mandated standard deduction-$1,325 for a mother and child, $2,675 for a married couple with two children. Among the elderly, half of those living alone lived on less than $1,000 a year, although their expenses (apart from medical care) were considerably less than those for the rest of the population, while among children, seventeen million (one in four) lived in families with inadequate income.

Lack of income translated directly into lower use of medical care, even while ensuring higher rates of both acute and chronic illness. A person living in a family with under $2,000 in income, for example, could expect to lose twenty-eight days of productivity a year to illness, while one from a household earning over $7,000 would lose only thirteen. Yet at the same time, the member of the lower-income group would consult a physician only five times a year, while the one from the higher-income family would consult one six times. Differences in dental care were even wider: nearly 80 percent of people in the poorer group failed to visit a dentist in any given year (as opposed to 40 percent from the wealthier group), and when a poor person finally did go to the dentist, the visit resulted in an extraction 37 percent of the time (versus 10 percent for the wealthier group). Young bodies ordinarily recuperated on their own, and this minimized the consequences of inadequate care to some degree, but for the elderly poor the inability to consult a physician truly undermined the quality of life. A senior citizen from the poorer group, for example, would experience 50 percent more days of immobility and loss of functioning due to illness than would his counterpart in the wealthier group. And since loss of functioning, at all ages, translated into lost work days and diminished wages, the tendency of the poor to get sicker exacerbated their poverty. "These poor people who get sick and who go to the hospital are statistics," wrote the assistant secretary of health, education and welfare Wilbur Cohen. "But, they live among us; and their misery, buried in the statistics, is very real."

Not only did poverty and illness tend to reinforce each other-the poor got sicker, the sick got poorer-but medical breakthroughs in the postwar years paradoxically made the problem worse. Where once all people, regardless of income, could count on a certain equity in the distribution of physical fortitude (in the nineteenth century infant mortality rates were actually higher among the wealthy in Europe, who would subject themselves to pernicious obstetrical techniques and unhealthy fashions), now money could buy better health. New drugs were capable of curing (rather than merely alleviating pain), and their very existence challenged prevailing notions of social equity. "I am 80 years old and for ten years I have been living on a bare nothing, two meals a day, one egg, a soup, because I want to be independent," a witness testified at a congressional hearing in 1959. "I have pernicious anemia, $9.95 for a little bottle of liquid shots, wholesale, I couldn't pay for it." Illness and poverty were inseparable, and becoming more so. Traditional hallmarks of poverty, such as lack of education and adequate nutrition, unhealthy and unhygienic home environments, and poor social and psychological support structures, increasingly seemed like failures of the medical system rather than social pathologies. Governor Nelson Rockefeller of New York emphasized the bond between these two great social challenges when he reminded an assembled audience in 1965 that one of every six American adults was unable to hold employment or engage in the quotidian activities of life because of chronic disease or handicap, mental retardation, senescence, or alcoholism. Certainly access to private insurance did not cure all these ills, but it invariably salved and assuaged, speeded recovery, and retarded demise.

(Continues...)



Excerpted from Poor People's Medicine by JONATHAN ENGEL Copyright © 2006 by Duke University Press . Excerpted by permission.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.

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Table of Contents

1 Antecedents : poverty and early poverty care programs 1
2 Precursors to Medicare and Medicaid 28
3 War on poverty and the genesis of Medicaid 44
4 Hard-to-reach groups 69
5 Redefining health 92
6 Charity care and comprehensive reform under Nixon 107
7 Health planning and community medicine in the 1970s 123
8 Health and welfare reform in the Carter White House 144
9 Block grants and the new federalism 163
10 Recovering the cuts, managed care, and comprehensive reform 184
11 Managed Medicaid, AIDS, and the Clinton health bill 209
12 Afterword 244
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