Healthcare History and a Primer for Today

Having spent 12 years marketing to the Healthcare Industry, I am astonished how little Americans know of this system.  Providing history and a primer to help.  

Transcript

Healthcare History and a Primer for Today 

January 2025

By AD Tippet

In a piece in Medical News Today, reviewed by Daniel Murrell, M.D. and entitled, “What was Medieval and Renaissance medicine?”, the authors note, “Across Europe, the quality of medical practitioners was poor, and people rarely saw a doctor, although they might visit a local wise woman, or witch, who would provide herbs or incantations. Midwives, too, helped with childbirth. The Church was an important institution, and people started to mix or replace their spells and incantations with prayers and requests to saints.”

This feeds into the popular imagination, much of it accurate, of the Middle Ages as a time of bloodletting and doing penance for disease.  All of this culminated in one of the worst medical episodes of all time, the Black Death of the 1300s that infected geographies ranging from Central Asia to the Middle East and Africa, and, of course, Europe, where one-third of the population perished. It did not help that a great famine preceded the black death, partially due to climate change.  Yes, it’s not a new thing – but I digress.

The Middle Ages were not all bleeding and religiosity.  For example, using vegetation, particularly herbs, could be effective: “Herbs were very important, and monasteries had extensive herb gardens to produce herbs to resolve each imbalance humor. The local apothecary or witch, too, might provide herbs.” 

And that was Western Europe. In Islamic cultures, there was a focus on building hospitals.  Doctors relied heavily on the study of Greek medical texts and made notable contributions to surgery, pharmacology, and diagnosis.  

Though practitioners of Chinese medicine were not allowed to cut into dead bodies, their knowledge of human physiology was essential to their medicine. This included practices like acupuncture, herbal remedies, dietary adjustments, and massage. It also helped that Chinese and Japanese cultures cultivated bathing practices—not so much in Europe.  

However, European monks and scientists discovered some valuable plants with powerful anesthetic and antiseptic qualities.  People use wine as an antiseptic to wash out wounds and prevent further infection. This would have been an empirical observation because people had no idea that germs caused infections then.

In addition to wine, surgeons use ointments and cauterization when treating wounds. Many saw pus as a good sign that the body was ridding itself of toxins in the blood. But of course, they did not know what we do now.  There was little understanding of how infection works. People did not link a lack of hygiene with the risk of infection, and many wounds became fatal for this reason.

And this is not even a historically distant view; as late as the 1880s, there was little hygiene knowledge.  After being severely wounded by a crazed assassin, President James Garfield lingered for weeks, eventually dying not of the initial gunshot but from infection.  As noted in Candace Millard’s Destiny of the Republic, “A team of physicians administered shockingly archaic treatments, to disastrous effect, “Not only did many American doctors not believe in germs, but they took pride in the particular brand of filth that defined their profession. They spoke fondly of the “good old surgical stink” that pervaded their hospitals and operating rooms, and they resisted making too many concessions even to basic hygiene.”  The author adds, “Although Garfield was dangerously ill, taking him to a hospital was never considered. Hospitals were only for people who had nowhere else to go. “No sick or injured person who could be nursed at home or in a medical man’s private residence,” And Millard concludes of medicine, “change that, had it come earlier, almost certainly would have spared his life.”

Now, we can look back and shake our heads at the wrongheadedness that pervaded healthcare before the 20th century, but what will those alive during the late 21st and 22nd centuries say about us? Will they look at the likes of RFK Jr. and his visceral, if not proven, fears of vaccines as some form of barbarism?  Will the idea of a scalpel, not a laser, nor the insertion of a nanobot be considered archaic by future generations?  

In the Star Trek movie The Voyage Home, the crew of the starship Enterprise are sent back to 1980s Earth.  At one point, the Doctor, Leonard McCoy, encounters a standard operation and thunders, “My God, man, drilling holes in his head is not the answer! The artery must be repaired! Now, put away your butcher’s knives, and let me save this patient before it’s too late!” Later, he finds a poor elderly woman getting Dialysis.  McCoy explodes, “Dialysis? What is this, the Dark Ages?” He hands her a large white pill, which she swallows.  Later, she is dancing in the hallway, stating, “The doctor gave me a pill, and I grew a new kidney! The doctor gave me a pill, and I grew a new kidney!”  

This was a funny moment in the movie. Still, if you told people dying of bacteria in Paris, Cologne, or London in 1346 and convinced them that all they needed was a pill, they would be as joyous as the woman formerly suffering from kidney disease. Unfortunately, today, the debate is not entirely centered on innovation but on who controls the direction of healthcare in the United States.  Like everything from business to trade to college education, the intrusiveness of government and those desiring its more significant role is the center of the argument.  This is not new.  

In a profile of Germany’s healthcare system and its beginnings, authors Miriam Blümel and Reinhard Busse write of a landmark healthcare law passed in the 1800s.  Chancellor Otto von Bismarck’s Health Insurance Act 1883 established the world’s first social health insurance system. At the law’s inception, health insurance coverage was restricted to blue-collar workers. In 1885, 10% of the population was insured and entitled to cash benefits in case of illness (50% of wages for a maximum of 13 weeks), death, or childbirth.  Though implemented through imperial state apparatus, Bismark’s system consisted of contributions from employers and employees, similar to much of our private insurance today.    

Many of the issues around the 19th-century German system are germane to us 140 years later.  It appears increasingly evident that the murder of UnitedHealthcare Insurance CEO Brian Thompson was motivated more by the madness of the shooter rather than a bloody protest of the healthcare system.  Yet it is difficult to imagine that so many on the left, ranging from politicians to Ivy League professors, would be making spurious justification arguments were Thompson from the entertainment or consumer packaged sectors.   

The apparent reason for demagoguing the healthcare industry is that health is not like purchasing a movie ticket or even automobile insurance. We can do without cars and even an iPhone for a short period, but poor health permeates everything.  And underpinning our entire healthcare industry is insurance.  In simple terms, the concept of insurance means pooling groups of people who pay into a common fund.   Some will have to take money back out of the fund, while others may never have the need.  We are talking about healthy and unhealthy people.  We should differentiate healthcare purchases from groceries or gas, where items are purchased daily and across the mass of all people.  Healthcare is more like purchasing a car or iPhone after a blown transmission or dropping the phone into a swimming pool.  However, the cost of these items can be managed so that a pool is unnecessary.  The prohibitive costs that could happen are why the pool is necessary.   And there needs to be something, and someone administers the pool.  If the pool had zero restrictions, it would soon be exhausted.  If something is free, it gets used. If there is a cost, there is circumspection.  And I give you the example of one 88-year-old man.  One night, he cut himself while preparing his meal, and his finger was bleeding profusely.  Most people would wrap it in a bandage and wait until the doctor opened it in the morning. Maybe we would drive ourselves to an urgent care clinic.  Not this guy.  He called an ambulance, which took him to the operating room.  He used the most expensive healthcare transportation to take him to the most expensive real estate in a hospital.  Had he not had Medicare, one would have hoped for more thoughtfulness.  But in his mind, someone else was paying, so why go to the inconvenience of doing the right thing for the pool?  And this is why healthcare insurance companies often say no.  

In 2023, 92.0 percent, or 305.2 million people, had health insurance for some or all of the year. Private health insurance coverage remained more prevalent than public coverage, at 65.4 percent and 36.3 percent, respectively. Public coverage, however, increased from 19% to that 36% in 2008 through various governmental schemes, including Medicaid expansion.   

A Gallup poll released earlier this month found that just 28 percent of Americans say health care coverage in the US is excellent or sound, the polling firm’s lowest figure on that question since it started asking it in 2001. Yet 65 percent of Americans say their personal health care coverage is good or excellent—those in reasonable health skew that number. Sicker adults did not view their coverage as favorable. Over two-thirds of those in fair or poor health gave their insurance negative ratings.  And it is the pooling of healthy and unhealthy that gets to the core of how it works.  

We tend to think of healthcare insurance, or any insurance, as an entity that entails an us and them, or even an us vs. them mentality.  Most of the transactions we implement are of this nature.  A consumer wishes to purchase groceries, and Wal-Mart sells them.  Politicians and populists love us vs. them messaging. But insurance is really us and us, and often us vs. us.  Insurance companies create a pool of individuals to mitigate overall costs by collecting money from the “A” group, everyone in the pool, in the form of premiums. That money is then allocated to the “B” group claimants.

With insurance, A is often the same as B.  We pay a premium for the ability to access healthcare and then take it out upon need.  But we are swimming in the pool with many others.  It is not the insurance company but the sick people in the pool that drive up costs and reduce the care the rest can access.  For this to work, the pool needs a lot of healthy “A” s to pay for a single unhealthy “B,” which is why we are in a pool of thousands or millions of others to minimize the cost. There is no giant UnitedHealthcare or Cigna vault of gold coins overseen by some executive Smaug the Dragon, who grudgingly taps into the cash horde to pay for the care.  And healthcare is costly ranging from the skill of its practitioners who take years to train, to the cost of the medical devices and pharma that increasingly constitute the core of care.  

When claims are denied, it is much easier to assume greed on the part of the company than the harsher reality that the poorer the health of our fellow pool mates, the more we pay or experience limits to the care we can access. If the healthcare company approved all claims, it would eventually run out of premiums to the detriment of everyone in the pool. I sympathize with the irritation or fear of denied claims, but it is done to preserve the whole.  

There is also a myth that healthcare insurance companies are wildly profitable.  The total 2023 private insurance revenue across companies from UnitedHealthcare to Kaiser to Humana is $1,289 trillion. The profitability of these organizations is around $70 billion, which sounds like a lot to the average American or a Liz Warren populist.  Simple math tells us this is around a 5% margin. According to a study by NYU Stern School of Business, the average net profit margin across all industries in the US is around 8%, with 5% considered low, 10% a healthy margin, and 20% strong profitability.  Nine companies in the US alone make more profit than the entire private healthcare industry.  All innovation and research to improve how we purchase, utilize, and disperse insurance emanates from this profit.  

There is a perception that I pay a premium for whatever care I need.  If I knew I would have to pay out of pocket anyway, then why insurance at all?  Before the passage of the 2010 so-called Affordable Care Act or the ACA (I miss the days when laws were named for lawmakers and not some tacky advertising slogan), nearly 5 million Americans were on private, catastrophic insurance.  In these cases, most costs were out of pocket, but a terrible diagnosis would trigger the insurance. The ACA purposely targeted these pools as insufficiently providing care by giving away government (taxpayer) subsidies to their exchanges to lure people and broaden their pool.  

The ACA has provided health insurance coverage to over 20 million Americans (the original target was 40 million).  The massive subsidization has led to the lowest uninsured rate in United States history.  However, the ACA has accomplished the reduction by transferring those who were once in private pools or were healthy enough not to purchase insurance into subsidized governmental pools.  A private healthcare company can raise premiums but will be pilloried for doing so.  The government can either try to raise taxes or, increasingly, borrow the money to subsidize care.  Essentially, all the ACA does is expand the pool from a set group of people in a Kaiser pool and move them into a much larger and more expensive national one.   Either way, the calculations are still the same.  Pooling healthy with unhealthy to minimize risk and cost.  One of the few provisions of the ACA that made sense was the individual mandate that forced the uninsured to purchase. Since a cohort of the uninsured often consists of young and healthy, it made the pool better.  However, forcing the purchase was dubious as it was truly a tax and was later repealed during the first Trump administration.  

One of the ACA’s popular aspects was eliminating the inability to garner insurance due to pre-existing conditions. Again, this added those who needed to access care in large quantities and immediately, without any period of paying, to the pool, driving up costs.  

Immigration also factors into this debate.  Because undocumented migrants do not have insurance, when they access care, and ERs will not turn them away for humanitarian reasons, they further skew the system because of a lack of premium payouts.  

My colleague Ben Connelley of Hardihood Books has an excellent overview of single-payer. But it is the same principle. Instead of premiums, we pay taxes for our healthcare system, but it is a different kind of pool. In this case, one with all our fellow Americans. Medicare and Medicaid are each based on pooled health insurance programs, but instead of premiums, the basis for the inputs is taxation.  

Governmental control raises another problem. Thompson and his colleagues were incented to maintain the quality of their pool.  A government entity is motivated by elections and the accrual of power.  Incentives matter, and within the ACA exchanges, we are already seeing a decrease in quality, and more and more physicians are simply eschewing the acceptance of patients who hold that insurance.  A private enterprise’s response would be to improve the system and make it easier for the doctors.  A government will simply pass a law saying all physicians must accept these patients and the regulatory overload that entails.  

Our healthcare system is highly complex.  There are 1 million physicians, 4 million nurses, and another 17 million employees ranging from MRI techs to pharma researchers to the person who takes your insurance card at the front desk.  Wellness centers, doctor’s offices, ambulatory surgery centers, urgent care clinics, home health, and hospice all comprise the continuum of care.  At the center are over 6,000 hospitals. Yet despite our system’s incredible complexity, the ability to access care comes down to tradeoffs, and right now, Americans and their leaders are really bad at tradeoffs.  

The American people want low taxes but also vast safety nets and services.  They want protection in the homeland and even abroad but eschew a larger military or the necessities for the projection of American power.  They want unlimited access to healthcare without paying the necessary costs or taking steps towards good personal health.  And because one of the medical procedures increasingly prevalent with lawmakers, and even presidents, is backbone removal surgery, our government leaders will not address these looming issues.  

A talking point of the left is that healthcare is a right.  It is not.  Much of health does include unknowns such as pancreatic cancer or type 1 diabetes.  Yet healthcare is also about choices, wellness or lack thereof, leading to hypertension, heart ailments, or type 2 diabetes.  According to the Centers for Disease Control, the obesity rate in the United States is 40.3% for adults between the ages of 20 and older. Given a limited amount of resources, is it fair that the guy who smokes two packs a day and covets that fourth helping at the Golden Corral can demand the right to unlimited healthcare at the expense of the aerobics instructor who eats a spinach salad and has never tasted a McDonald’s quarter pounder with cheese?    

Liberty, true liberty, is the ability to make bad decisions.  If the smoker wishes to smoke, I say be my guest.  But then do not demand lung surgery and oxygen tanks as his right.  And if he is in the pool, he should pay a higher premium for his choices.