Before Medicaid


How did doctors treat the poor before Medicaid?  A professor at Harvard University did a nice historical review and basically described how charity care and “sliding scale” fee structures were used by doctors.  But things changed:

  • Then after World War II, when government and private insurance companies became more involved in paying for care, doctor could no longer charge a wealthy patient more than a struggling one, for insurers and public programs wouldn’t allow it.
  • Further threatening the math behind an informal sliding scale was the subsequent move by insurance companies to rein in doctor fees. Using their bargaining power, they got major price concessions from doctors in exchange for sending patients their way.
  • “Barter economies, sliding scales … the minute insurance came into the picture, that stuff disappeared,” Jones said.
  • Now we have a government-funded system built on two morally questionable assumptions, said Princeton University health economist Uwe Reinhardt, who served three terms on the national commission that advises Congress about physician pay rates. Suppose he teaches three undergrads at Princeton, he says. One goes to law school and becomes a lawyer, one gets an MBA and goes to work on Wall Street, while the third goes to medical school and becomes a doctor. Of the three, he says, only the doctor is expected to provide free or discounted services. “I love the way, with one wave of your hands, you somehow tax the doctors and nurses and make them give charity care,” he said. “I view giving charity care when it’s expected of you as a tax.”
  • The second bit of uniquely American illogic embedded in the Medicaid system is the assumption that a doctor’s services are worth less when administered to a poor person, he said. Put another way, rates are based on the social status of the patient. “If a doctor worked an hour with a patient, he should get paid,” Reinhardt said. “And yet we say, ‘No, you should be paid less because you treated a poor person.’ What kind of orange juice did we drink in high school? It’s an outrageous idea.”

My answer to this?  Get out of the system!

Douglas Farrago MD

Douglas Farrago MD is a full-time practicing family doc in Forest, Va. He started Forest Direct Primary Care where he takes no insurance and bills patients a monthly fee. He is board certified in the specialty of Family Practice. He is the inventor of a product called the Knee Saver which is currently in the Baseball Hall of Fame. The Knee Saver and its knock-offs are worn by many major league baseball catchers. He is also the inventor of the CryoHelmet used by athletes for head injuries as well as migraine sufferers. Dr. Farrago is the author of four books, two of which are the top two most popular DPC books. From 2001 – 2011, Dr. Farrago was the editor and creator of the Placebo Journal which ran for 10 full years. Described as the Mad Magazine for doctors, he and the Placebo Journal were featured in the Washington Post, US News and World Report, the AP, and the NY Times. Dr. Farrago is also the editor of the blog Authentic Medicine which was born out of concern about where the direction of healthcare is heading and the belief that the wrong people are in charge. This blog has been going daily for more than 15 years Article about Dr. Farrago in Doximity Email Dr. Farrago – [email protected] 

  7 comments for “Before Medicaid

  1. March 7, 2015 at 10:29 am

    I thoroughly enjoyed reading this article.

    I have been searching for a narrative of the history of government involvement in healthcare that was more aligned with the queasy distrust in my gut. This fits the bill perfectly!

    Thanks for writing this and the link to the Harvard article.

  2. Michael Birnbaum , MD
    March 5, 2015 at 2:13 pm

    Unfortunately, it is probably too late even though getting out of insurance networks would have been the only way to save medicine.
    With so many docs now becoming employed, they will not be allowed to resign.

  3. Fred LaVenuta MD
    March 4, 2015 at 11:57 am

    When I was an intern (yes, an intern) at the Brooklyn Methodist Hospital in the mid-sixties and I remember the free clinics that were held with poor patients trooping in primarily to get their prescriptions refilled. The hospital charged NYC Welfare Department for a regular office visit as almost all the patients were on Medical Assistance. I don’t think there was much charity involved as we interns were paid a pittance ($3600 a year) and prescription pads were cheap so the hospital pocketed a tidy sum for each session.

  4. gene gebele
    March 4, 2015 at 11:55 am

    Agree! Why stop with Medicaid? Abandon all insurance. You don’t need a third party to be paid any more than Starbucks needs one to sell coffee. Giving in to government has never worked for groups throughout history and never will. Eventually it will be required for you to have a license. Stop being a lemming before it’s too late.

  5. Perry
    March 4, 2015 at 10:50 am

    As you pointed out Doug, in the past, it was the physician’s prerogative to establish a fee schedule according to ability to pay, and many physicians likely did provide care for little or no money. Unfortunately, now physicians are being coerced in to a system that forces them to take amounts dictated by the government that don’t begin to cover reasonable costs. It has me baffled that the Administration put in place increased payments for 2 years, now they are gone, plus advocating moving millions on to Medicaid without ensuring proper physician coverage for all these patients.

    • Doug Farrago
      March 4, 2015 at 11:41 am

      I charge a reasonable monthly fee. I also give away care (10%) that I don’t advertise. It can still work.

  6. Bill Ameen, MD
    March 4, 2015 at 10:08 am

    Great post, Dr. Doug! Insurance “insured” the destruction of modern American medicine when it started paying for routine office visits. It should ONLY have been reserved for accidents and emergencies, similar to auto accidents. Even the cost of surgery could have been kept lower if insurance hadn’t steadily increased reimbursements starting 40-50 years ago. Like anyone else, doctors and hospitals will charge what they think they can be paid. But what has resulted is that medicine, and possibly dentistry, is the only profession wherein doctors cannot receive what they charge (even to pay their own expenses), and patients misuse insurance constantly for minor problems with no skin in the game except modest copays. If I went back into practice, I’d do your model, direct pay, as it should be, except that I’m…just tired…!

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