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STRAINED MERCY: THE ECONOMICS OF CANADIAN HEALTH CARE, by ROBERT G. EVANS* reviewed fry THEODORE R. MARMORt The history ofmedicine in the United States over the past 17 years has been terribly confused. In 1971, Senator Edward Kennedy had his aides write a book about the world of American medical care entided In Critical Condition [I]. This sense of trouble was so widespread that Republicans and Democrats, liberals and conservatives, competed over which form of national health insurance to offer. In 1974, for instance, the now forgotten Kennedy-Mills proposal received extended consideration in the finance committees of the Congress, as did the Nixon CHIP plan and the catastrophic health insurance bill of Senators Long and Ribicoff. It all seems very long ago, looking back from the Reagan era, this flurry of proposals and stalemate over universal government health insurance [2, S]. In 1987, the picture is much different, politically and intellectually. No one of political significance is directly concerned with universal health insurance—for the nation or for a particular state. The deficits of the first Reagan administration dominate political discourse and set severe limits to what seems sensible to discuss. Intellectually, we are living with the debris of the reform mentality of the 1970s. In medicine, that reform mentality supported forms of governmental regulation certain to disappoint but seen as steps toward more sensible governmental intervention in the financing of health services. The regulation that in fact emerged was dispersed bureaucratically, disconnected to the major financing of care, and celebrated with visions of success no reasonable analyst should have accepted. Health planning emerged in 1974—205 little agencies all over the country, equipped with the author-»Toronto: Butterworth & Co., Ltd., 1984. tProfessor ofPublic Management and Political Science, Yale School ofOrganization and Management, 16A Yale Station, New Haven, Connecticut 06520.© 1987 by The University of Chicago. All rights reserved. 0031-5982/87/3004-0548$01.00 590 I Theodore R. Marmor ¦ Canadian Health Care ity to say No to major capital expansion but without the financial carrot to induce anyone to do very much but rush to the state legislature or to the courts to protect planning restraint. The Professional Standards Review Organizations (PSROs)—the program to monitor quality of care—were given to yet another set of agencies, dominated by physicians , disconnected in practice from the payment by Medicare, Medicaid , or the commercial and nonprofit health insurance plans. Medicare and Medicaid, once separate organizationally, were technicallyjoined in what is now known as HCFA, the Health Care Financing Agency of the Department of Health and Human Services. All through the decade observers complained about the relatively high rates of inflation in medicine and, as with the weather in Mark Twain, little was done about it. The Carter administration supported serious legislation to contain hospital costs but was defeated by a combination of hospital lobbyists, distrust of Carter's team, and disbelief that the federal government could accomplish what it promised. Inflation continued unabated amid drivel about a voluntary effort to control costs by the health industry, and a new set of actors came to play much more important roles in American medicine. Attracted by the gold mine of funds flowing through a system of retrospective, cost-based reimbursement, the captains of American capitalism came to see opportunity where the politicians had seen causes for complaint. In the hospital world itself, small chains of for-profit hospitals —the Humanas and Hospital Corporations of America, to name the most prominent examples, concentrated in the South—grew into large companies through the disappointing regulatory decade of the 1970s. The growth of Health Maintenance Organizations (HMOs)—itself slower than promised by the enthusiasts ofthe 1973 legislation—came to include for-profit firms as well. Industrial giants—like Baxter-Travenol and American Hospital Supply—took their conventional dreams of competitive growth and extended them to vertical and horizontal integration . A glut of physicians started to come into practice, weakening the traditional power of doctors to determine their terms of practice. AU of these changes in the structure of American medicine took place within the context of increasingly antiregulatory and anti-Washington rhetoric. Both Democrats and Republicans had been influenced by a generation of academic policy...


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