The Long Road to Medicare

By Danielle Aloia, Special Projects Librarian

July 30 marks the 50th anniversary of the establishment of Medicare. But getting to the signing of the Social Security Amendment of 1965, which created Medicare, was a long road.

In the 1910s and 1920s, numerous reports, recommendations, and programs advocated the development of a national health system, especially after the United Kingdom adopted National Health Insurance in 1911. Due to opposition from the American Medical Association (AMA), labor unions, and insurance companies these recommendations were never fully accepted. However, there was consensus that something needed to do be done to protect the poor from the burden of healthcare costs.

As the charts below show, in 1929 citizens spent over three billion dollars on health care. The next chart shows where that money was spent. As noted by William Foster, chairman of the Committee on Public Health of the National Advisory Council on Radio in Education, “We now spend every year for medical care over three billion dollars, yet only one dollar out of every thirty goes to public health services for the prevention of disease.”1

From: Foster, William Trufant, U.S. Public Health Service. Doctors, dollars, and disease. [New York]: Public Affairs Committee, Inc.; 1937.

From: Foster WT, U.S. Public Health Service. Doctors, dollars, and disease. [New York]: Public Affairs Committee, Inc.; 1937.

From: Foster, William Trufant, U.S. Public Health Service. Doctors, dollars, and disease. [New York]: Public Affairs Committee, Inc.; 1937.

From: Foster WT, U.S. Public Health Service. Doctors, dollars, and disease. [New York]: Public Affairs Committee, Inc.; 1937.

In the 1930s, Roosevelt established the Committee on Economic Security to study social insurance and public assistance needs and programs to help combat the economic effects of the Great Depression. The Committee did not put forth any legislative proposals in regard to health insurance because, among other controversies, of the “possibility that any such a proposal would be declared unconstitutional….”2 (How telling in light of the debates at the Supreme Court in 2012 on the constitutionality of the U.S. Patient Protection and Affordable Care Act!) The Committee did put in their report that more research and investigation was needed in the health insurance area. Franklin D. Roosevelt signed the Social Security Act (SSA) in 1935 with clear understanding that it was just the beginning of a more extensive program, one that would include a healthcare component.3

Roosevelt signing the Social Security Act, 1935. See here for names of participants. Courtesy of the Social Security Administration.

Roosevelt signing the Social Security Act, 1935. See here for names of participants. Courtesy of the Social Security Administration.

After the SSA was passed, Roosevelt quickly formed the Interdepartmental Committee to Coordinate Health and Welfare Activities. This committee held The National Health Conference in 1938, to “present and discuss the needs of the people of this country for preventive and curative service in illness and for the reduction of the economic burdens caused by illness.”4

The conference laid out five recommendations from a commissioned report of the Technical Committee on Medical Care, entitled the Need for a National Health Program:

From: Ratliff Beulah Amidon, U.S. Public Health Service. Who Can Afford Health? [New York]: Public Affairs Committee, Inc.; 1939.

From: Ratliff BA, U.S. Public Health Service. Who Can Afford Health? [New York]: Public Affairs Committee, Inc.; 1939.

Ultimately, the Committee adopted four of the five recommendations, all but recommendation four.5 The remaining recommendations were to be a “gradual expansion along well-planned lines with a view to achieving operation on a full scale within 10 years.”6

The recommendations were then embodied in the Wagner Bill in 1939, which outlined a broad federal health program. Not surprisingly, the bill was not brought to vote because of the opposition of the AMA and others.7 Subsequent legislative proposals were put forth, but none took hold.

In Marmor TR, Marmor JS. The Politics of Medicare. [Rev. American ed.]. Chicago : Aldine Pub.; 1973.

In Marmor TR, Marmor JS. The Politics of Medicare. [Rev. American ed.]. Chicago : Aldine Pub.; 1973.

In the early 1950s, the Truman Administration found “the right people” to move a health program forward—older Americans. The aged were sicker, poorer, less insured, and comprised the most hospitalizations. By focusing on this population, the administration hoped it could curb opposition.8 The focus of the program would be on hospitalization rather than on general health insurance.

But it would take the next 25 years for the passage of a health law. The Kennedy Administration led the charge in 1961 with the introduction of Medicare legislation, but the majority voted against it. The 1964 election brought a shift in the majority to the Democrats, allowing for further consideration of the bill. In 1965, with the backing of the AMA and insurance companies, Congress was ready to make a deal. They split Medicare into mandatory Part A: hospitalization, and voluntary Part B: medical insurance. This split helped appease opponents of a national health care system, or what some viewed as “socialized medicine.” Hospital costs were an easy target because hospital bills were large, costs were easier for actuaries to calculate, and patients were more likely to accept help. A portion of the Social Security taxes established by FDR were earmarked to cover the costs of the program and the elderly would pay extra if they opted into Part B.

LBJ signs the Medicare Act (Social Security Amendments) with Harry Truman looking on, 07/30/1965. Courtesy of OurDocuments.gov.

LBJ signs the Medicare Act (Social Security Amendments) with Harry Truman looking on, 07/30/1965. Courtesy of OurDocuments.gov.

In 1967, 19.36 million were enrolled in Part A and 17.87 million took advantage of Part B.9 Today, 55 million people are enrolled in Medicare.10 As the population ages, the economics of the program may need alteration—indeed, the Affordable Care Act has provisions for reforming physician payments and health care delivery. Medicare may need additional modernization in the future to support the population and remain economically viable. But as the history of Medicare shows, life-changing legislation takes time and patience.

References

1. Foster WT, U.S. Public Health Service. Doctors, dollars, and disease. [New York]: Public Affairs Committee, Inc.; 1937.

2. Ibid.

3. Myers RJ, McCahan Foundation. Medicare. Homewood, Ill.: Published for McCahan Foundation, Bryn Mawr, Pa., by R. D. Irwin; 1970.

4. U.S. National Health Conference. Proceedings of the National Health Conference. Washington : U. S. Govt. print. off.; 1938.

5. Ratliff BA, U.S. Public Health Service. Who Can Afford Health? [New York]: Public Affairs Committee, Inc.; 1939.

6. U.S. National Health Conference. Proceedings of the National Health Conference. Washington : U. S. Govt. print. off.; 1938.

7. Myers RJ, McCahan Foundation. Medicare. Homewood, Ill.: Published for McCahan Foundation, Bryn Mawr, Pa., by R. D. Irwin; 1970.

8. Marmor TR, Marmor JS. The Politics of Medicare. [Rev. American ed.]. Chicago: Aldine Pub.; 1973.

9. Witkin, E. The Impact of Medicare. Springfield, Ill.: C. C. Thomas; 1971.

10. Davis K, Schoen C, Bandeali F. Medicare: 50 Years of Ensuring Coverage and Care. New York: Commonwealth Fund; 2015. Available at: http://www.commonwealthfund.org/~/media/files/publications/fund-report/2015/apr/1812_davis_medicare_50_years_coverage_care.pdf

Tracking the History of Cancer Drug Development

Lourdes Sosa, today’s guest blogger, is an associate professor in the department of management at the London School of Economics and Political Science.

Have new cancer drugs entered the market targeting ever-smaller portions of the total cancer patient population? If so, is this a symptom of a high-tech market phenomenon known to economists as submarket fragmentation?1 If we accurately answer these questions, we will better understand oncology drug discovery competition and thus will offer better strategic recommendations to enhance drug discovery efficiency.

My co-authors, Prof. Roberto Fernandez (MIT Work and Organization Studies), Prof. Andrew Lo (MIT Finance), and myself, Prof. Lourdes Sosa (LSE Department of Management), set about to answer these questions more than a year ago. As we began our research, our most important first step was to identify the anticancer drugs available in the US market since the birth of chemotherapy in the 1940s. A perfect data source became the Physicians’ Desk Reference (PDR®), an annual directory of approved drugs and full prescribing information that began publication in 1947.

Our next challenge came about immediately: where could we locate an accessible repository that held the entire collection to date? Although key local libraries offered us access to a large portion of the collection in print, we found in the New York Academy of Medicine Library full access to the entire collection. Furthermore, NYAM holds the collection in microfiche format, making it easy to browse from one year to another.

Starting a year ago, we began collecting data from the NYAM Library. We are now happy to report how our study is taking shape (we are also delighted to have an avenue to thank the support of Ms. Danielle Aloia and the team of expert librarians at NYAM).

The title page and an entry in from the 1949 Physician's Desk Reference.

The title page and an entry from the 1949 Physicians’ Desk Reference.

The figure below shows the oncology drugs available in the US market from 1947 until 2001 (data entry is still in progress). The process to identify these drugs started with the Product Category Index of the PDR®, where all cancer-related drugs can be found. We then read the full prescription information included in the product information section of the PDR® to extract the actual indications approved per drug. This latter step allowed us to make a precise decision on whether the drug was a treatment for cancer (as opposed to a treatment for a side effect or complication), and if so, to define for which cancer indications the drug was approved.

Courtesy of Roberto Fernandez, Andrew Lo, and Lourdes Sosa.

Courtesy of Roberto Fernandez, Andrew Lo, and Lourdes Sosa.

As can be seen in the figure, there is a big change in reporting in 1970. Starting that year the Product Category Index of the PDR® reported a category titled antineoplastics that made it straightforward to identify relevant drugs. In contrast, the categorization used in 1947–1969 has categories such as multiple myeloma and breast carcinoma listed separately. More importantly, during those earlier years a vast majority of drugs listed as cancer-related were in fact general-purpose drugs such as steroids, analgesics, and diuretics, which just happened to be novelties in the market.

As mentioned, we used the full prescription information to discern between the cancer-treating drugs that constitute the core of our study and those of either general application (e.g., steroids) or symptom-relief purpose (e.g., anemia treatments). The actual population of cancer-treating drugs for us to use is the black portion of the above figure shown with the legend “treating drugs.”

Our next step (after completing this exercise to year 2013) will be to calculate an index of coverage that proxies for the percentage of all cancer patients that each drug can treat. We will eagerly report on our progress as soon as we have preliminary results to share.

Reference

1. Sutton, J. 1998. Technology and Market Structure: Theory and Structure. MIT Press, Cambridge, MA.