The Medical-Industrial Complex

I

The American crisis over health has finally taken a place alongside the urban crisis, the ecological crisis, and the “youth crisis” as the subject for solemn Presidential announcements, TV documentaries, and special features of magazines ranging from Fortune to Redbook. But to the average consumer of pills, hospital care, and doctors’ services, the crisis in health care is nothing new, except that the stakes—health, beauty, and life itself—get higher with each advance in medical technology, from miracle vaccines to organ transplants. The odds against the sick are high, and getting higher all the time.

Health care is, first of all, a scarce and expensive commodity. With the increasing centralization of medical manpower and modern equipment in a few big city medical centers, rural areas, small towns, and urban ghettos have been left empty of even the most rudimentary, old-fashioned services. Where services exist, their high cost is the most serious barrier to health care, not only for the very poor, but for growing numbers of working people as well. As the price of medical care mounts, health insurance has become a necessity; but insurance premiums are becoming more expensive too, while benefits dwindle as rapidly as the costs of medical treatment increase.

Money aside, the consumer’s major problem is finding his way about an increasingly impersonal, fragmented, irrationally arranged set of health services. The patient, rich or poor, treks from specialist to subspecialist, from clinic to clinic, from doctor to laboratory, losing more money and time at each stop. No one is concerned with the general state of his health, as opposed to his immediate illness; fewer and fewer doctors are even concerned with the patient’s whole body, sick or well. Long waiting times and brusque service are now almost as characteristic of private doctors’ offices as they are of the hospital clinics used by the poor. And for the very poor, usually black and brown people, the price of care in a hospital’s “charity” ward or clinic is often the humiliation of having his body used as “material” for research and the training of doctors.

The health care itself that the American consumer receives is, in most cases, barely adequate. Despite our uncontested prowess in medical technology, mortality statistics are shamefully high: The US ranks fourteenth among the nations of the world in infant mortality rates, twelfth in maternal mortality, eighteenth in male life expectancy at birth (all figures 1967). More detailed studies show the same bleak picture. For example, a 1964 study sponsored by the Teamsters revealed that no fewer than 40 percent of the New York hospital patients surveyed, all of them Teamster members and their families, were receiving “less than optimal” medical care. Thus, the social cost of the American medical crisis is not just discomfort; it is lives.

The Kennedy-Johnson administrations discovered the health crisis in the early Sixties, at just about the same time they discovered poverty, the neglect of the old, racism, and some of the other indignities of American life. After dozens of government studies, one simple fact stood out: old people, the poor, the blacks are often sick, and, conversely, the sick are often old, poor, and/or black. Infant mortality rates for the poor are twice that of the national average; life expectancies are years shorter; tuberculosis and other infectious diseases, all but eliminated for the middle class, still rage at epidemic proportions in ghettos and rural poverty belts. The Kennedy-Johnson diagnosis seemed obvious at the time: Americans, and especially poor Americans, are not healthy because, among other reasons, they do not receive adequate medical care.

It was not that there was anything seriously wrong with the American health care delivery system per se, the Democratic administrations reasoned. Certainly the United States’ armory of medical technology—research centers, major teaching hospitals, medical schools, and the like—surpasses that of any other nation. But millions of people were for one reason or another excluded from the use of these bountiful medical-technical resources. At least twenty million, and perhaps as many as fifty million Americans were too poor to afford medical care. Additional millions lived in areas lacking all except the most rudimentary medical services. Medical advances, readily available at a few elite urban medical centers, were slow to reach most sick people. The Kennedy-Johnson policy was to intervene energetically on all fronts: Give more purchasing power to the poor, create a few exemplary new health institutions in ghetto and rural areas, and add to this a little gentle governmental prodding toward “planning.”

Programs followed in profusion, adding up to what came to be called the “Health New Deal.” There were Medicare and Medicaid to finance care for the aged and the poor. There were the Community Health Centers and the Community Mental Health Centers (both called for “maximum feasible participation” of the local people who would use them). These, it was said, would provide new points of entry to the medical care system and act as a thorn in the side of the reluctant medical establishment. Finally, there were two federally sponsored efforts at reorganizing and “rationalizing” the health care delivery system: Regional Medical Programs (the “heart, cancer, and stroke” program, or “RMP”) and Comprehensive Health Planning (the “partnership for health” program).

RMP was to stimulate “regional cooperative arrangements” between medical schools and community hospitals, in order to encourage the schools to plan for more effective translation of medical discoveries into medical practice; it would focus on the “killer” diseases, heart disease, cancer, and stroke. Comprehensive Health Planning aimed to create regional health planning agencies throughout the nation, each composed of a “partnership” of local health care consumers, providers (doctors and hospital executives), and government officials.

For the first time, the federal government had stepped into the traditionally private preserve of the health services industry and taken a direct responsibility for health financing and organization. As many liberal critics realized even while the Eighty-ninth Congress was still churning out the Health New Deal legislation, it was in many respects a very tentative step, hedged with scores of concessions to private medical interests. For example, Medicare for those over sixty-five and Medicaid for the very poor had multibillion-dollar budgets which might have made far-reaching changes in the health system. But instead they were designed merely as uncontrolled subsidy programs for hospitals and doctors. Hospitals were paid on a cost-plus basis and doctors allowed what were loosely called their “reasonable and customary” fees, with no regard for the quality or efficiency of the care rendered. Regional Medical Programs and Comprehensive Health Planning were given no authority over Medicaid, Medicare, or any other public money for health; they were left to reorganize the health system essentially on the basis of persuasion.

But if all the parts of the Health New Deal did not add up to a consistent federal policy, or perhaps, as Senator Ribicoff charged in 1968, to any policy, they nevertheless amounted to a good try and, at least in the beginning, a generous one. Between 1965 and 1967, annual federal expenditures for health leaped from $5 billion to $12 billion and a vast new bureaucracy of health workers took root in the suburbs of Washington.

Whether because it went too far, as conservatives charged, or not far enough, as liberal critics saw it, the Health New Deal was, by 1969, a widely acknowledged failure. After four years, RMP and Comprehensive Health Planning were, on a national scale, still so embryonic that Congress seriously questioned whether they should be continued at all. For example, New York City still has no Comprehensive Health Planning agency; it has only an agency set up in late 1969 to plan a Comprehensive Health Planning agency. New York City RMP is at least in the phone book, but it has so far failed to generate a single “regional cooperative arrangement” or even a plan for one.

Both programs foundered on the active or passive resistance of the city’s major hospitals and medical schools. Comprehensive Health Planning has been blocked by the city’s thirty-year-old, private medical center-dominated Health and Hospital Planning Council, which refused to enter into the required “partnership for health” with consumers and local government officials. RMP, which in New York City is administered directly by the city’s seven medical schools, was quietly converted into a petty cash fund for the medical schools’ pet projects.

Even the community health and mental health center programs are faltering, drained by unexpectedly high costs and torn by power struggles between local medical interests and “target populations” who are demanding community control. More than five years after their inception, the community health center programs are still in the “demonstration program” phase, serving, at most, only a few hundred thousand people in the nation.

Compared to the other programs, Medicaid and Medicare at least succeeded in the administrative sense, that is, they exist as programs, and as programs which require ever larger budgetary allocations year after year. But Medicare and Medicaid were the Health New Deal’s worst mistakes. Encouraged by the program’s generous reimbursement formulas, hospitals took the lid off their reported “costs,” and doctors began to redefine “reasonable” fees as the highest they could get away with. Between 1964 and 1969 physicians’ fees rose by 33 percent and hospital charges by 77 percent (several times faster than the rise in cost of living and much more rapidly than in the pre-Medicaid and Medicare years). By 1970, the average consumer—who is too young for Medicare and too “rich” for Medicaid anyway—was worse off medically than he had been in 1964. RMP and Comprehensive Health Planning had brought no new, or better integrated, services to his neighborhood (or to any neighborhood for that matter) and the old services now cost several times more than they had.

Even the Medicare and Medicaid recipients, the aged and the very poor, are not that much better off. Medicare premiums and deductible fees (which the consumer pays for out of his own pocket) have soared. And, since Medicare covers only a limited range of services, recent medical inflation has left old people, with their heavy use of health services, still putting out more cash per year for medical care than the average younger, non-Medicare American. Medicaid recipients have fared no better. Only two states, New York and California, even tried to include comprehensive services under Medicaid. In all states, as costs rose, benefits were cut and the eligibility standards were raised in order to cut down the number of recipients. For example, in New York City, more than one million people were dropped from the Medicaid program between 1968 and 1969. Even those who have remained on the Medicaid rolls have often found themselves unwelcome at private doctors’ offices and private hospitals, and have been forced to continue to rely on the same old charity facilities.

This was the Health New Deal’s legacy to Nixon—a budget, a bureaucracy—and an inflated version of the same old health crisis. The Republicans began auspiciously enough when the President acknowledged in July, 1969, that the American health system was facing “a massive breakdown.” But in the long silence that has followed this announcement, it has become evident that the Administration has been revising this view.

The rare statements that do leak down from HEW’s upper reaches suggest that the Administration has begun by rediagnosing the problem. It is not the health of the people that is breaking down; it is the industry itself: the health insurers, struggling to match premiums to escalating prices; the hospitals, trying to accommodate the influx of Medicare and Medicaid-enriched patients; the doctors trying to meet the rising expectations of their patients for high-technology miracle cures. If the “client” of the Johnson health programs was a welfare mother with a sick infant, the client for the Nixon health programs is an insurance executive with a computerful of unmet claims.

The analysis of the influential health economics experts—the systems analysts, RAND men, top-level consultants to government—and increasingly of government officials themselves is that the afflictions of the health system are “iatrogenic,” i.e., brought on by past treatment. With Medicare and Medicaid, the Democratic administrations increased people’s purchasing power too fast, and poured too much demand too soon into a health system which is too disorganized, archaic, and wasteful to handle it. Boost demand beyond the capacity of a limited supply and, according to all the standard calculations, the prices must rise. The validity of this analysis is never questioned, because the conclusions are too attractive to Republican policy-makers: The last thing the American health system needs, they can now argue, is more money.

Nixon’s prescription was almost self-evident: no more new spending for health without basic reorganization of the health care system. The catch is that all the available methods for “restructuring” conflict with other policies and priorities of the Administration. Nixon can’t intervene directly in the system—with price controls for medical services, enforced planning, direct operation of services, etc., because that’s tampering with free enterprise, and who knows where that will end? (If you regulate the doctors and the hospitals, then why not the drug companies and the companies that sell hospitals everything from commodes to catheters to computers?)

Nixon can’t intervene indirectly, using economic incentives to reshape the medical market place, because economic incentives, by definition, cost money. For example, doctors could be lured, with bonuses, out of solo, fee-for-service practice and into more efficient ways of treating people, such as prepaid group practices, or into health centers in the poorer districts. Or hospitals and doctors could be rewarded for expanding their preventive care services and thus contributing to long-term reductions in the incidence of illness. But all this costs money, and so long as the Administration is more concerned about inflation than, say, infection, there will be no significant federal investments in the health system, no matter how much money they would save in the long run.

What this will mean in practice is even smaller budgets for all existing federal health programs. The Administration tried (and failed) to get Congress to cut the Hill-Burton program for hospital construction; it will probably cut medical education and research funds further, and it has made a few moves toward streamlining the federal health bureaucracy. For example, according to a bill introduced by Senator Javits and backed by the Administration, the RMP and Comprehensive Health Planning programs would be partially merged to achieve, among other things, reductions in administrative costs. If the Social Securities Amendments bill passes the Senate, Medicare costs will be pruned through a long series of minor curbs on greedy hospitals and doctors. There will be new fee ceilings for the doctors and hospitals will be required to trim their charges down to federally defined “reasonable” limits. Medicaid, according to a cryptic Administration announcement on June 11, may be largely replaced by a new, doubtless cheaper, program under which the poor could enjoy the dignity of helping to pay for their own medical care.

The Administration’s only gesture toward reorganizing the health care system is the so-called Health Maintenance Option (HMO) proposal, a minor technical amendment in the Medicare law which would allow Medicare recipients to combine their Medicare benefits for hospital care with those for physician’s services into a comprehensive package—provided that the recipient can find an institution which offers comprehensive care, and provided that that institution can do so more cheaply than the usual doctor-plus-hospital care arrangement. Touted by Administration spokesmen as a bold step toward comprehensive, prepaid (as opposed to fee-for-service) care, the HMO program threatens to be so ineffectual that even the AMA has given it an offhand blessing. Meanwhile, wholly new health programs, such as the national health insurance proposals being pushed by the UAW, the AFL-CIO, Ted Kennedy, and others, will probably have to wait until 1972 to rate even a Presidential comment.

The difference between the Nixon and Kennedy-Johnson styles is a sharp one. Kennedy and Johnson aimed their health programs at specific consumer constituencies, the aged, the blacks, and rural and working-class whites. They assumed that the benefits would not only pay off in votes but would spill over to the entire American economic system. Federal subsidy of care for the poor and aged meant a smaller financial burden on union-management welfare plans and local government welfare programs. And, in the long run, a healthier nation is a richer nation. A host of studies, many government-sponsored, demonstrated the losses to industry through employee illness. Thus health itself was economically desirable and, in the rhetoric of the Health New Deal, a basic right to be guaranteed by the federal government.

The Republicans, obviously less concerned with building a political base among the poor than with short-run economic stability, prefer to restrict themselves to serving business, and the health business, directly. The plan, if it is one, is to reduce government “intervention” in the health industry, yet continue to subsidize it—all the while keeping a hard eye on the federal budget. As for the consumer, the Nixon reasoning is that, after the excesses of the Sixties, what the American health consumer needs is a dose of “benign neglect.”

II

In post-Great Society America, a policy of deliberate neglect is all too easily mistaken, by the poor and their advocates, for a policy of arbitrary repression. Neglect, far more than intervention, requires the sweetening of a reasoned, scientific, academically approved analysis. What Patrick Moynihan has done for neglect in the field of race relations, Eli Ginzberg has done, albeit far less impressively, in the field of health. The significance of his recent book, Men, Money and Medicine, is not that it is well-reasoned, well-documented, or even well-written, but that it is a book, that is, it is a book-length assertion, by a well-known health economist, that nothing can be done, or should be done, about the health problem, if it is indeed a problem.

Ginzberg’s argument goes far deeper than the currently popular, pseudo-economic apologies for reduced government spending in health. He is concerned not just with the short-run problems of “recovery” from the supposed upsurge of demand created by Medicare and Medicaid, but with the long-term issue of the place of health care among national priorities. In out-line, Ginzberg’s thesis reminds one of nothing so much as the old Jewish story about the woman who goes to her neighbor to demand the long overdue return of a borrowed pot. The neighbor protests: “In the first place you never lent me a pot; in the second place it was an old pot; and in the third place, I returned it to you in better condition than when I got it.” Men, Money and Medicine says, essentially: There is no health crisis; there is no solution for it anyway; and besides, we wouldn’t want to try the solutions that exist.

According to Ginzberg there is no health crisis, first of all, because health services have very little to do with people’s health. Brushing aside fifty years of spectacular advances in medical technology, Ginzberg insists that “disease is largely self-limiting. People who are ill, even seriously ill, will generally get well without the active intervention of a physician.”

Ginzberg leaves it to the medical profession itself to provide evidence for this startling assertion: “If the medical profession is ever moved to undertake a basic self-appraisal, it would be important to study the histories of patients with similar symptoms and conditions in terms of the interventions to which they were subjected. It is just possible that with regard to a wide range of conditions those who were treated least made the best progress.” In the meantime, medical care, to Ginzberg, is a somewhat self-indulgent alternative to cutting back on “too much alcohol, too many drugs, and promiscuous sexual relations.”

In any case, says Ginzberg, the public will never be satisfied with increases in the availability of medical services. In the peculiar economics of health, “supply determines demand.” Again, Ginzberg simply asserts this, claiming that there is “strong evidence that this is true.” He quickly goes on to state the implications: Build new hospitals and the public will fill them. Offer them new, more technologically refined medical services and the public will develop more subtle ailments “requiring” treatment. If the new services hadn’t been offered, no one would have “required” them: after all, they got along without them before, didn’t they? In fact, we can go one step further: by reducing the present supply of health services, we could actually reduce the need for health services. People have no irreducible, objectively measurable, health needs, only vague, culturally defined, desires for care.

Society, then, can decide arbitrarily what level of medical services (and hence what level of medically treatable illness) it wishes to support. At any level, the same felt disparity between need for services and their availability will occur. So we shouldn’t take seriously the inevitable gripes of consumers: “A modern system of medical care cannot rest on consumer satisfaction any more than it can rely on the discipline of the medical profession.” Given the nature of the problem (or, by this time, the non-problem), Ginzberg continues, there is no solution anyway. Attempts to generate a greater supply of services will only elicit a greater demand, and greater consumer dissatisfaction, in an endless, self-defeating cycle.

Without question, people have tended to make use of new medical services and new purchasing power to get them as they have become available. But we cannot infer any inborn zest for medical attention, or any universal tendencies at all, from this observation. The phenomenon of apparently infinitely expandable demand for medical care is peculiar to our society at this particular time. And what is significant about this society, at this time, is that it has been characterized for years by a wide-spread, severe limitation in the supply of medical services. This scarcity was not planned by technocrats like Ginzberg, nor is it in any way “natural”: it is the result of the conscious policies of the suppliers of the nation’s medical care.

The AMA is of course notorious for containing the supply of medical services. It has lobbied consistently, and usually successfully, to limit both government subsidy of medical services and expansion of medical education. Less well-known, but perhaps equally effective, are the insurance companies—Blue Cross, Blue Shield, and the commercial companies—which, under the prodding of the hospitals and medical societies, have refrained from developing comprehensive health insurance programs, as opposed to narrow, sickness insurance plans. Most Americans are at least partly insured for catastrophic illnesses, but few have coverage for day-to-day needs such as routine doctor visits, dental care, prenatal care, etc. Finally, in many cities, Blue Cross has joined forces with the major voluntary hospitals to prevent new hospital construction. Acting through official or semi-official local health planning agencies, such as New York City’s Health and Hospital Planning Council (which is partly financed by Blue Cross), Blue Cross and the larger hospitals have been able to close smaller hospitals as “unnecessary” and veto public funds for the construction of new ones. For the big hospitals, this assures that their beds will be filled and their income increased. For Blue Cross, the fewer hospital beds available in the community the harder it is for Blue Cross subscribers to get into a hospital and cash in on their Blue Cross benefits.

As a result of the artificial shortage created by the medical professions and insurance companies, an American enters the health system, when he can, with a vast backlog of unmet needs and unattended complaints. Lift the present financial and logistic barriers to care, provide services which are both technically excellent and socially acceptable, and people will use them, perhaps initially even overuse them. But, after a while, with quality care routinely and easily available, they may well, contrary to Ginzberg’s view, need and demand less care.

For example, countries such as Sweden and England, with government-financed care for everyone, experience no higher rates of use of medical services than does the US. An open-ended supply of medical services does not, as Ginzberg assumes, lead to a runaway demand. In fact, the supply, if it is any good at all and actually serves to improve people’s health, should eventually reduce the demand.

Perhaps the most serious refutation of Ginzberg’s assumption about supply and demand is that all too often people have failed to make use of new facilities and new purchasing power as they became available. The Health New Deal programs of the mid-Sixties for the poor have, more often than not, foundered on the recalcitrance of the consumer rather than his eagerness. In the Red Hook section of Brooklyn, one community health center was so seriously underused for its first two years of operation that OEO almost refused to refund it for 1970/71. In Boston, doctors sit idle in a new (1969) Harvard-staffed health center built primarily for working-class and middle-class families.

Health services, then, are not a commodity which consumers will snap up unquestioningly once the price is right and the packaging attractive. Class and cultural antagonisms to medical professionals and institutions can outweigh urgent, objective needs for care. To urban blacks, a new health facility, no matter how soulfully turned out, may be just another reminder of white technological dominance, another colonial outpost in the ghetto.

Prior to the passage of Medicare, President Johnson is said to have privately feared that Medicare would deluge the nation’s hospitals with old people and disastrously overstrain the entire health system. Medicaid, it was feared, would be followed by an uncontrollable, mass shopping spree as millions of poor Americans for the first time entered the medical market place. But today, after nearly four years of both programs and with twenty million people enrolled in one or both, the expected explosion in consumption of medical care has still not happened. In fact, hospital admissions increased less than half as rapidly between 1964 and 1968 as they had in the previous four years, without Medicaid and Medicare (and most hospitals are still operating well below capacity). The data on the use of physicians’ services (in clinics and private offices) are still incomplete, but there is certainly no evidence yet of a large, net increase.

If, as apologists for federal health budget cuts reason today, the “effective demand” engendered by Medicare and Medicaid automatically boosted medical prices, that “demand” must have exerted its influence on prices in some mystical action-at-a-distance fashion, without the intervening mechanism of increased consumption. Contrary to Ginzberg’s arguments, purchasing power and supply have not proved to be the ultimate determinants of the use of health resources.

If Ginzberg’s arguments are faulty, they in no way weaken his conclusion, for they have little to do with it. There is no solution, he says, because, in the end, the solution is unacceptable. In his Introduction, Ginzberg confides that his viewpoint is “that of an economist who has been concerned with reconciling the aspirations of professional and political leaders to improve the quantity and quality of health services…within the context of our political system, which stresses freedom of choice of work and the realities of our economic system, which places heavy reliance on competition in the market place.” (Emphasis ours.) Our medical system, according to Ginzberg, is a free marketplace, dominated by individual doctors acting as entrepreneurs. The doctors are pivotal, he continues, and to make the system more equitable would require drastic limitations of their personal liberty, tantamount to conscription. Improved medical services, of dubious value in themselves, are certainly not worth the price of our democratic principles.

No one could argue that the obstacles to change in the health system are not firmly tied to the larger political and economic system. But they are not the constraints that Ginzberg identifies. The American medical system is no more a “free marketplace” than is the American economy as a whole, and doctors, like the shopkeepers and craftsmen before them, are rapidly losing their “pivotal” position. Health services may have lingered in the cottage industry stage much longer than manufacturing, but the industrialization and monopolization of health services are now a fact.

At the center of the health services industry is no longer the doctor, but the medical school or major teaching hospital with its “empire” of owned or affiliated institutions, and with a local monopoly on the production and distribution of advanced medical technology. New York City’s medical scene, for example, is dominated by nine of these medical empires, which together control more than three-quarters of the city’s hospital beds, more than half of its doctors, nurses, and other professionals, and the lion’s share of public money for biomedical research and development. The majority of New York’s doctors practice, full or part-time, in the empires’ institutions. At least two million New Yorkers are wholly dependent, and another four million partly dependent on these medical empires for their health and strength.

For example, virtually all of the health resources in the Bronx are controlled by the coalition empire of Albert Einstein College of Medicine-Montefiore Hospital. The parent institutions control, directly or through affiliation contracts, three municipal hospitals, a Veterans’ Administration hospital, a state mental hospital, two community mental health centers, two voluntary hospitals, and a community health center. They exert a lesser degree of control, through interlocking staff appointments, over the few remaining unaffiliated institutions in the Bronx. Similarly, Columbia-Presbyterian controls health resources in upper Manhattan, Downstate Medical Center in Brooklyn.

The physician in New York and other cities has lost his nineteenth-century entrepreneurial autonomy not to the encroachments of government, but to the exigencies of a technology controlled by the medical empires. The major medical centers have the advanced equipment, the hundreds of necessary paramedical workers, and the resources of scientific expertise. If the doctor wants to use them, he does so—and hence defines his practice—on terms set by the institution.

Liberals in the profession, as opposed to the conservatives of the AMA, have heralded this increasing centralization of medical resources into a few major institutions or multi-institutional networks as a step toward a more “rational,” integrated health care system. But in their social effects the emerging medical empires are no more rational and are often less humane than the old system of private doctors they are replacing. As citadels of the most advanced medical technology, the major medical centers have emphasized esoteric, high technology treatment of hospitalized patients over preventive care or routine medical care, and they tend to emphasize medical research and education over human care of any kind. The middle-class patient runs the risk of costly—and sometimes harmful—medical overkill in the hands of the empire’s scientist-practitioners. Poor patients, if they are medically “interesting,” serve as the human material for research and teaching projects. If they are uninteresting, they are processed hurriedly, or else “dumped” to a less prestigious institution.

The dominant medical institutions of this country are, for tax purposes, classified as “nonprofit” corporations, but they have begun to display, over the last decade, the kind of expansionist élan characteristic of frankly profit-making enterprises. Income in excess of that required to meet expenses is plowed into real estate expansion, stockholdings, the construction or acquisition of new subsidiary institutions, or the purchase of new, research-oriented equipment.

Presbyterian Hospital, for example, the teaching hospital affiliated with Columbia University College of Medicine, spends over $3 million a year on real estate and has become a major slumlord in Washington Heights-West Harlem. Mount Sinai Hospital, in East Harlem, recently sank $750 thousand into the construction of a hyperbaric chamber—an asset of questionable value even in the treatment of the exotic diseases it was designed for. Increasingly the funds for such ventures have come out of the public treasury, either directly, through special grants, or indirectly, through inflated charges to Medicaid and Medicare for “patient care.” (In New York City, Medicare and Medicaid contribute half of the hospitals’ operating budgets.)

As the medical empires expand, relying more and more on government money to nurture their development, they are themselves becoming essentially private “governments” of health, commanding medical and community resources on a city-wide or borough-wide scale. They, not the individualist physicians of Ginzberg’s halfhearted strategies, are, in more and more American cities and suburbs, the major force to be dealt with in creating a reasonable health care system.

While institutions have replaced physicians at the center of the health service industry, services themselves are no longer the only major product of the American health industry. Health goods—drugs, hospital supplies, and equipment—have become increasingly essential elements of medical care, absorbing an ever larger share of national health expenditures. Since 1960, sales of drugs have been growing at a rate of 9 percent a year; sales of hospital supplies (linen, disposable syringes, etc.), by 11 percent a year. Sales of medical electronic equipment alone hit $350 million in 1969. Profits throughout the health industry increased even more rapidly. Attracted by the spectacular 1968/69 boom in hospital supplies and equipment generated by Medicaid/Medicare, drug companies such as Parke-Davis, Abbott Labs, and Warner-Lambert have diversified into supplies and equipment. Conversely, supplies and equipment companies such as Baxter Labs, Becton-Dickinson, and Johnson and Johnson have diversified into drugs—resulting in the emergence of a single, conglomerated “health products industry.”

Economists have ignored the health products industry and its impact on the health services industry (Ginzberg included, despite the “Money” in his title). Even to the most hardheaded economists, health services have an aura of charity and voluntarism with which the exuberant profiteering of the health products industry contrasts distastefully. But, like it or not, the demand by the hospitals for fancy, expensive equipment like cobalt radiation units, open-heart surgery equipment, and computers often outweighs community health needs as a factor in hospital planning. Mount Sinai’s $750,000 hyperbaric chamber, for example, sits often unused in East Harlem, an area desperately in need of TB detection, lead poisoning screening, and addiction programs. Within the hospitals, the rhythms and requirements of the major equipment, rather than of the doctors or, of course, the patients, increasingly set the pace and style of patient care. In the future, it is at least technically possible that computers, electronic patient-monitoring devices, and mechanized, assembly-line diagnostic testing may reduce the role of the doctor to that of a full-time technician, or hired consultant, to the hospital center.

The health services industry has not been an unwilling host to the growing health products industry. Executives of the health products companies sit on the boards of medical schools and medical centers and on prestigious commissions to study health policy. Research physicians consult eagerly and profitably for the health products industry. Health products industry executives are showing an increasing interest in expanding into the still largely nonprofit health care delivery system. Out of the growing rapport between the delivery and the products industry is emerging a single, American, Medical-Industrial Complex.

In turn, the health industry, taken as a whole, cannot be understood in isolation from the larger economy. Medical technology is the technology of plastics, chemicals, and electronics as much as it is the technology of human physiology. Drug companies, like Merck, make chemicals, and chemical companies, like Dow, make drugs. With the decline in spending on aerospace, giants like United Aircraft, North American, and TRW have been turning their engineering talents to the manufacture of heavy electronic equipment for hospitals. And, where there is no common technology to provide access to the health industry, the big firms move in through acquisitions and mergers. Conglomerates like American Home Products and Squibb-Beechnut have repertoires ranging from chewing gum and dog food to prescription drugs. More and more companies, in more and more sectors of American industry, look to health for a highly profitable, recession-proof, peace-proof sideline.

It was Medicaid and Medicare and, to a certain extent, Blue Cross which propelled the health industry from the remote periphery to a more central position in the national economy. All of these programs reimburse health care institutions essentially on the basis of the institution’s total annual costs of providing care, multiplied by the fraction of the institution’s total annual bed-days used by the “eligible population,” e.g., by Medicare patients. The institutions are accountable to no one in determining what will go into the average “cost” per patient per day. Commonly listed as “administrative expenses” are salaries of $50,000 a year and up for administrators and physicians, public relations men to clean up the hospital’s image in the community, and staffs of lawyers to fight worker attempts to unionize. Depreciation on a $40,000 piece of equipment is a legitimate charge to the cost of patient care even if a $20,000 machine would have done just as well, or even if the machine itself is of little medical or social utility.

With no limit to expenditures, so long as they could somehow be justified as “patient care,” the hospitals went wild. “Medicare,” exulted an electronics trade journal in 1969, “is the computer manufacturer’s friend.” It made no difference that Medicaid and Medicare did not lead to significant increases in the use of hospitals. It did lead to vast institutional and corporate growth, in which the individual (whatever his tastes, psychology, or effective “demand”) is an increasingly incidental participant.

Thirty years ago, the independent doctor, with his AMA card in his wallet and all the mysteries of medicine in his black bag, was the major obstacle to change in the American medical system. Today he is not the only, and probably not the most able, profiteer in the health industry. To ask for an excellent and equitable health system for everyone is to ask our big city medical empires to turn their priorities from research, teaching, and institutional expansion to the care of sick people; it is to ask the health products industry to favor the consumer over the stockholder; it is to ask a growing sector of American industry to come into health as a public service, or not to come at all. Unwittingly and for the wrong reasons, Ginzberg argued correctly when he concluded that fundamental improvements in health care can be achieved only through a headon confrontation with our political and economic system. There can be no more damning indictment of capitalism.

As we have seen, Republican and Democratic strategies for reform differ sharply in style and scope, but both acquiesce unquestioningly in the constraints imposed by a private medical-industrial system. Nixon is justly skeptical of the experience of the inflated Johnson and Kennedy health programs, but his skepticism extends only to that narrow interface of the health system where patients encounter practitioners. The less visible heart of the system—the medical school-center empires, the health products companies and insurance companies—goes unchallenged. Meanwhile the health crisis, as experienced by the poor and by growing numbers of the middle class, has deepened. There are signs that disgust with the performance of the politicians and their expert consultants is producing a “movement” for radical change.

Students in medical and nursing schools are bringing the energy of the antiwar movement to the issue of health services. In Philadelphia and Boston, medical students have demanded open admissions—for third world students—to medical schools. In New York and other cities, students are challenging the priorities of their schools and teaching hospitals, demanding free, dignified care for the poor. Black and brown community health worker groups are bringing demands for community control into hospitals and health centers, in addition to escalating quantitative demands for more and more accessible health services.

In New York City, where agitation focuses on existing health institutions, sit-ins and police confrontations are becoming almost as common in health centers and hospitals as they are in the schools. In Chicago, where there are far fewer health institutions for the poor to attack, groups like the Young Lords, the Panthers, and the Young Patriots have set up free storefront clinics, staffed by students and radical young professionals. Finally, women, largely white women, are beginning to raise women’s liberation issues in health institutions—demanding legal abortions, dignified obstetrical and gynecological care, as well as better, cheaper care in general.

What is now emerging is the outline, at least, of a common movement program: That health care should not be a commodity, to be bought by “consumers” and sold by “providers,” but should be free at the point of delivery. (That is, the costs should be borne by the entire society, through an equitable tax system.) That medical empires should be decentralized, and be subject to community and worker control. That in all health institutions, priority should be put on patient care, with special emphasis on preventive health services. That the health products industry should be nationalized, and run as a nonprofit enterprise. That medical schools should open their doors to black, brown, and white women applicants and working-class youths, and should provide opportunities for professional training, up to the M.D. level, for all health care workers. That doctors everywhere should be salaried employees of community institutions, not private entrepreneurs.

In short, the health system should be re-created as a democratic enterprise, in which patients are participants (not customers or objects) and health workers, from physicians to aides, are all colleagues in a common undertaking.