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Doctorsí Negligence Makes Health Policy Tragedy

Author: Amity Shlaes, Former Hayek Senior Fellow for Political Economy
January 20, 2010
Bloomberg

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Now we know their names.

Scott Brown in Massachusetts, whose contest for the vacant Senate seat has demonstrated the limits of the Kennedy Legacy. Bart Stupak, the congressman from Michigan whose objections to the health-care legislation are slowing progress for the Obama administration.

But how did Brown and Stupak become fixtures in health care? No matter how many decades Brown served in the National Guard, or how much Stupak has thought about abortion, you have to ask what gave them the authority to determine the future of 18 percent of the nation's gross domestic product. Politicians have the power over the mighty health-care industry because someone else is a no-show -- the doctor.

It is the doctor who knows what happens when $150 billion is drained out of hospitals and offices via a surtax on so- called Cadillac health-care insurance plans, those with the most generous benefits. It is doctors who can tell you how many seconds shorter each visit has to be in order for them to fit in all the new Medicaid patients.

It is the doctors who have a powerful lobby crafted to punch back. The American Medical Association's Form 990 shows that Chief Executive Officer Michael Maves made almost $700,000 in 2007, the most recent year available. For what is Maves paid, if not to protect doctors and patients?

Lip Service

Yet doctors are either: a) not mentioning the big issues at all or b) paying mere lip service to them. This week, the week of the fight of its life, the AMA home page blast is about Haiti. This is in spite of the fact that two of the big goals of the AMA, medical liability reform and keeping insurance companies and government officials away from control of health care, are ignored or overruled by the legislation that seems poised to become law. The American College of Surgeons does include a protest on its home page, but below Haiti and mammograms.

Doctors weren't always such political pygmies. In the 1930s, New Dealers considered including national health care in their roster of programs. The Ted Kennedy of the day -- Senator Robert Wagner of New York -- was a powerful advocate for broad coverage. The price tag for one program under discussion was enormous -- $850 million, including not only disease prevention and new hospitals but also an early version of Medicare.

When Doctors Fought

But doctors fought back against the "peril" -- to use their word -- of government intrusion. The AMA even called an extraordinary convention in Chicago, the group's first since World War I. The doctors specifically targeted a proposal for compulsory insurance, the very sort of mandate in the legislation of both houses of Congress today. The doctors stopped the lawmakers. The doctors' tenacity was noted by the New York Times in a headline from 1938: "Doctors Still Bar New Health Deal."

The doctors were no less feisty in 1960s, at least at first. President Lyndon Johnson proposed Medicare, the government insurance program for the elderly, and his charm offensive included a private meeting with doctors, according to Irving Bernstein's history of the period, "Guns or Butter."

Demonstrating an Obama-esque ability to overlook the inconsistencies of his own legislation, Johnson assured doctors they would control their own billing, and actually read to doctors the "statement in the bill prohibiting any government interference in any kind of medical practice at any time, and also the statement prohibiting any government interference in any kind of medical practice at any time," according to Bernstein.

Holding Sway

Blue Cross or other insurers would set rates, which was to say, no price controls. Doctors were willing to go along with Johnson, in part because, as Bernstein noted, they still believed that they would always hold more sway with insurers than the government.

A few administrations later, of course, price controls did come along, the inevitable consequence of Medicare's open entitlements. Instead of receiving a daily rate for however long a patient stayed in a hospital, hospitals would get a flat fee for each specific procedure. This was a blow to medical budgets on a scale with the current proposal for Cadillac surtaxes on health plans. Again, medicine fought back -- led this time by the American Hospital Association. They lost, but at least they tried.

Citizens themselves have noticed this transformation. Over the decades Harris pollsters have asked citizens what trades they viewed as having very great prestige. In 2008, 58 percent of those polled mentioned teaching, up 23 percentage points from 1977. Firefighters and nurses were also in the 50s. Doctors were at 53 percent, which sounds fine until you see that the ranking is down 15 points from 1977.

Growing Weaker

What caused the doctors to become such weaklings? In the olden days a doctor often practiced solo, for good or ill. Today's doctors are Dilberts in office teams, Outlook captives, password-challenged clock punchers.

A stronger explanation is policy. Between Johnson's Medicare, and the strength of, first, traditional insurers, and then managed care, doctors were turned into cogs. Maybe there is still enough there to have an effect on the last bits of the legislation, or in writing the rules that come out of it.

Doctors may tell themselves that in their political caution they are merely applying the Hippocratic Oath often summarized in the phrase "First, Do No Harm" to health policy. But there comes a time when no action harms, and the country has reached that point.

This article appears in full on CFR.org by permission of its original publisher. It was originally available here.

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