The Medical Establishment Took The Treasury’s Keys

According to Uwe E. Reinhardt, an economics professor at Princeton, about half a century ago, organized medicine and the hospital industry in this country struck a deal with Congress.

In retrospect, it was as audacious as it was incredible: Congress was asked to surrender to these industries the keys to the United States Treasury.

In return, the industries would allow Congress to pass a 1965 amendment to the Social Security Act, described as “an act to provide a hospital insurance program for the aged under the Social Security Act with a supplementary health benefits program and an expanded program of medical assistance, to increase benefits under the Old-Age, Survivors, and Disability Insurance System, to improve the Federal-State public assistance programs, and for other purposes.”

We have come to know it as Medicare.

As Wilbur Cohen, a chief architect of the law and subsequently secretary of health, education and welfare, later described the deal:

The sponsors of Medicare, myself included, had to concede in 1965 that there would be no real controls over hospitals and physicians. I was required to promise before the final vote in the executive session of the House Ways and Means Committee that the federal agency [to be in charge of administering Medicare] would exercise no control.

Medicare was supposed to not interfere in any way in the physicians’ treatment of Medicare patients – through what we now know in private health insurance as “managed care.” Nor was Medicare allowed to influence the way hospitals were constructed and operated. Finally, the deal called for a completely one-sided payment system.

Obviously, things haven’t gone according to plan.

Check out the rest of Reinhardt’s blog post on The New York Times

One thought on “The Medical Establishment Took The Treasury’s Keys

  1. Pingback: http://t.co/AiETeNMAL5 < The Medical Establishm… « Hippocrates Shrugged

Leave a Reply

Your email address will not be published. Required fields are marked *