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Ensuring America’s Health: The Public Creation of the Corporate Health Care System

Author(s):Chapin, Christy Ford
Reviewer(s):Thomasson, Melissa A.

Published by EH.Net (May 2017)

Christy Ford Chapin, Ensuring America’s Health: The Public Creation of the Corporate Health Care System.  New York: Cambridge University Press, 2015.  xiv + 358 pp. $110 (hardcover). ISBN: 978-1-107-04488-3.

Reviewed for EH.Net by Melissa A. Thomasson, Department of Economics, Miami University.

This narrative by Christy Ford Chapin seeks to understand the fragmentation of health care delivery in the U.S., its high cost, and why providers operate “with one eye directed at the patient while the other eye is fixated on insurance company reimbursements and standardized treatment parameters” (p. 2). The book focuses on explaining the answers to these questions by understanding the behavior of key interest groups: providers and health insurance companies (both non-profit and for-profit).  The first several chapters focus on providing a history of the development of the insurance company model, and identifying relevant interest groups and documenting their positions. Chapter 6 explains why the insurance company model leads to high costs; chapter 7 examines the politics underlying Medicare; and the epilogue provides a discussion of health care reform from the passage of Medicare to the passage of the Affordable Care Act.

There is a lot to like about the book; Chapin has done extensive research and relies on both primary and secondary sources as she provides evidence for her claims. Chapter 2, for example, looks at federal reform politics in the post-World War II era, and discusses reform efforts that go well beyond Truman’s attempt to pass national health insurance legislation in the 1940s. For example, there are references to bills such as the 1955 Wolverton-Kaiser Bill – that would have provided prepaid groups with federally insured loans to build medical facilities, the Hill-Aiken proposal to provide federal aid to states to purchase insurance for low-income populations, and proposals for federal reinsurance programs in 1954 and 1955.

Chapter 7 is also particularly strong. In it, Chapin discusses the various attempts at reform proposed by policymakers in the 1950s that then lead up to the passage of Medicare in 1965. The detail in this chapter is rich, and Chapin’s work provides significant context to understanding the structure of the Medicare program, how private insurance companies finagled their way into program administration and offering supplemental coverage, and how the American Medical Association (AMA) ultimately failed to thwart Medicare’s passage.

There is also a lot not to like about this book. Chapin’s central argument is that the “insurance company model” is a result of the power wielded by the AMA as it moved to protect the financial interests of physicians. There is certainly an element of truth to this, but her central thesis puts far too much emphasis on the role of physicians in shaping health insurance. As a result, she neglects and oversimplifies other aspects of the development of the market. She says that “at a time when many options were available in the marketplace, physicians pushed health care organization towards a profoundly flawed design” (p. 27). It is not at all obvious what she is talking about. Is she talking about the creation of Blue Shield – which physicians designed? Something else? What other options were available? Presumably, she means some sort of universal coverage system that had already been adopted in other countries (which is definitely her preferred system). But when the physicians designed Blue Shield, there were few other options available. Progressive attempts at health care reform had been shut down in the 1910s, far before the AMA wielded significant power.

Chapin frequently asserts things that are not backed by evidence. For example, she argues that commercial insurance companies were “reluctantly, incrementally drawn into health care coverage by businesses requesting employee group policies. … Therefore, despite their aversion, commercial insurers had to develop a presence in health care financing” (p. 31). This is difficult to believe. It seems clear that for-profit insurance companies were not drawn into the market by businesses in the 1930s and 1940s when they had never been before.  Rather, the commercial firms saw the Blues offer employment-based coverage and surmount problems relating to adverse selection, and they recognized an opportunity. On page 102, Chapin states, “given the financial risks associated with the insurance company model, losing health care coverage to a federal program would have been a relief to many underwriters.” Again, there is scarce evidence for this statement and it certainly has not been borne out by the fight by insurance companies to prevent the government from offering a “public option” in the debate on the Affordable Care Act.

Overall, the strength of the book in adding to the discussion on the history of health insurance in the U.S. rests in its excellent use of primary sources to identify interest group politics. For researchers interested in pre-ACA federal reforms, chapters 2 and 7 are very interesting. Nevertheless, it does neglect the economic history of health insurance in favor of a more polemicized approach, and that is its glaring weakness.

Melissa A. Thomasson’s publications include “From Sickness to Health: The Twentieth Century Development of U.S. Health Insurance.” Explorations in Economic History, 39(3), July 2002, 233-53 and “Early Evidence of an Adverse Selection Death Spiral?” Explorations in Economic History, 41(4), October 2004, 313-328.

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Subject(s):Economic Planning and Policy
Markets and Institutions
Transport and Distribution, Energy, and Other Services
Geographic Area(s):North America
Time Period(s):20th Century: WWII and post-WWII