Physician Sovereignty and the Purchasers' Revolt

Not only did physicians become a powerful, prestigious, and wealthy profession, but they succeeded in shaping the basic organization and financial structure of American medicine. . . . The absence of countervailing power was also a key to the political influence of the profession.

—Paul Starr, The Social Transformation of American Medicine

In his pathbreaking book, The Social Transformation of American Medicine (1982), Paul Starr sought to demonstrate how physicians parlayed their "cultural authority" into social privilege, economic power, and political influence.Starr argued that physicians were able to suppress all challenges to their sovereignty and prevent outsiders from dictating the conditions of medical practice by controlling the labor supply, expelling profit-making enterprises, and instituting formal and informal mechanisms of social control.As a result, according to Starr, "over the politics, policies, and programs that govern the system, the profession's interests have . . . tended to prevail" (5). Although Starr convincingly describes the internal mechanisms and institutions that physicians devised to eliminate threats to their sovereign rule, his explanation of how physicians converted these parochial interests into political power in the public sphere is less compelling.My own review of the historical evidence suggests that physicians' political power was more illusory than real, occurring only when their political objectives coincided with those of other influential stakeholders.

The most important political issue for physicians, according to Starr, was the threat posed by third-party financiers of medical care, especially the federal government.Physicians vehemently opposed all proposals for federal financing of health care, concocting their own insurance schemes (Blue Cross/Blue Shield) instead as a less threatening alternative. They succeeded to a large extent because their agenda coincided with the concerns of employers, who preferred to provide fringe benefits to their workers as a way to undermine trade unionism, and of insurance companies, for whom government health benefits represented unwelcome competition.Physicians also had political allies in Congress among Republican opponents of the New Deal welfare state and among southern Democrats who controlled the key committees through which all social welfare legislation had to pass and who refused to support any program that might allow federal authorities to intervene in the South's racially segregated health care system.From 1938 until 1964 this conservative coalition endured, thwarting all efforts to enact national health insurance.

Starr surmised that the coming of the corporation would usurp the protected provider markets and undermine physician sovereignty, but instead the crucial causal force was the disintegration of the political coalition that had supported organized medicine's agenda. This transition began with the passage of Disability Insurance in 1956 and accelerated following the enactment of Medicare in 1965. The countervailing force came in the form of a purchasers' revolt, as the federal government, large firms, and insurance companies sought to rein in the providers and gain control over skyrocketing health care costs, revealing the fragility of physicians' power base.

The Struggle against Government Financing

For the first half of the twentieth century, physicians mobilized politically against any proposal for government financing of health care, and their opposition contributed to the failure of these efforts. The American Association for Labor Legislation (AALL) sponsored a model bill in 1915 for states to provide industrial workers with free medical services and hospital care, sick pay, and a modest death benefit. When the AALL bill was first introduced in New York, the state Medical Society approved it in principle, and the American Medical Association (AMA) hailed it as "the next step in social legislation" (Hoffman 2001: 79). The following year the AALL worked with statewide officers of the New York Medical Society to draft provisions that would be acceptable to physicians, finally agreeing to a compromise that would allow county medical societies to set fee schedules for medical services. Physicians from rural areas decried the AALL bill as "un-American," however, and elected new leaders who opposed it (ibid.: 86).

In the 1930s, when President Franklin Roosevelt considered including national health insurance in the Social Security Act, the AMA's House of Delegates adopted a resolution that "all features of medical service ... should be under the control of the...