The concept of the Welfare State—that is, the systematic dispensing of domestic wealth through public channels without regard for productivity—has been a part of social-political institutions almost as long as recorded history. One of the earliest examples is the paternalism in the Roman Empire under Diocletian in which the number of governmental money recipients exceeded the number of taxpayers. Welfarism figured dominantly in the political structure of the Greco-Latin city states, in the Medieval city, and in the post-Renaissance monarchies. But while the Welfare State has occupied history through the ages, its handmaiden—compulsory health care—has, historically, only yesterday made its entrance onto the grand scene of human endeavor.
Compulsory health care—which I shall term compulsory medicine—began, appropriately enough, in the land of authoritarianism, Prussia, in 1845; but, since the concept of governmental subsidy and employer levy had yet to grace the scene, its progress, understandably, was lackluster and its existence desultory until Bismarck (who perceived it as a clever means—which it was—of siphoning off funds for his war machine without the nagging necessity of appealing to the Reich) incorporated it into his national socialism in 1884.
With the introduction of Bismarck's compulsory medicine a new page was added to the history of welfarism. From the end of the 19th century to the present day, virtually the whole of Western civilization has adopted, in one form or another, the Iron Chancellor's notion of compulsory medicine, as politicians in the advanced cultures recognized the enormous, something-for-nothing appeal "free" health care holds for the masses. Until now the major exception to this trend has been the United States; however, under the guidance of such gurus of social progress as Kennedy, Ribicoff, Long and Mills—to name but a few—that exception is about to become the rule. As it is apparent that the United States is about to join the ranks of the total Welfare States, perhaps it would be prudent to pause to cast a backward glance over the course that compulsory medicine has cut through the fabric of Western civilization, on the slim chance that perhaps an examination of the past may serve as sober instruction to the health, welfare and political visionaries of the present, whose tinkerings with our destiny may evolve for the nation not a mean, snarling, precarious future, where the individual and liberty stand in jeopardy from the "good intentions" of an all-embracing ultra-State, but rather a future respectful and wholly compatible with individual dignity and freedom—B.F. Skinner notwithstanding.
THE PRUSSIAN PLAN
When Bismarck's sickness insurance plan was introduced to the Second Reich there was no serious medical opposition to it. Indeed, there was rejoicing in the German medical ranks. For the first time the profession was to be lofted to the heights of the almighty Prussian bureaucracy; vistas of financial and scientific progress were to open, the extension and availability of health care was to be broadened on a scale theretofore never imagined, medical education was to receive government encouragement and support so that it could advance and expand.
Well, whatever the reasons—greed, the contagion of a new idea, the German penchant for subordination to authority—it is history now; but the German doctors of 1884 renounced their claim to freedom—along with that of their patients. They relinquished the principle of professional secrecy—the sacrosanct confidentiality between the patient and his doctor—in exchange for the rule of health panel employees—the Kassen—over professional decisions. They agreed to fee schedules and payment by "the third party"—the Kassen—rather than directly by the patient.
As it began the German health panels hired the doctors more as part-time employees, but soon this method had to be abandoned due to mounting discontent and the discovery of corruption involving selling jobs to the doctors.
At this point, in the development of Germany's compulsory medical system, a new concept was introduced, which, in these "health maintenance organization" days of the 1970's, has a ring of chilling familiarity to it. The free choice of doctor by the patient was established all right, but only among the doctors who entered into contractual agreement with the Kassen. True enough, there still remained the private practice of medicine with its "antiquated" fee-for-service bias, but soon enough, with the continued lateral expansion of the system, this compensating area of refuge, for both patient and doctor, rapidly contracted.
Once in the system the doctor's fee was controlled on a contract basis and was paid according to the number of patient attendances. The more attendances, the more fees. What followed was a mounting number of attendances and, in retaliation the Kassen—dominated by lay personnel—began to cut fees. The lower the fees the more the doctors increased the number of attendances, and for the doctor, the degrading struggle for survival began.
The class war between the State and the German doctors continued with unremitting vengeance, but the muscle lay with the State. At each contract renewal the major task of the Kassen was to squeeze the doctors' fees; and, in this respect, since it had the persuasion of the purse, the Kassen had overpowering leverage against the individual doctor. Finally, in desperation, the doctors organized a fighting trade union, the Hartmann Federation—one of the first unions in the labor movement. The Federation was to replace individual contracts—collective bargaining was to be instituted—and panel administrators were to be denied the arbitrary power of accrediting panel doctors. Once more (so the hope developed) free competition among the doctors was to be restored.
It was a noble idea, but now, ensnared in the quicksand of authoritarian medicine, and with private practice virtually nonexistent, the German medical profession, unionized or not, found itself irretrievably trapped. The seeds of division were sowed among the profession so that by 1913 it became divided into three classes, each with antagonistic and irreconcilable interests. There were the panel doctors eligible to treat the insured patients; then there were the "trustee" doctors employed by the State in a supervisory capacity—the prototype physicians for the Professional Standards Review Organization (the "PSRO's"—the peer group so dear to the heart of Senator Bennett of Utah) proposed now for the U.S.; and finally, there remained a third group who subsisted on what remained of private practice, functioning occasionally as consultants to the Kassen. This last group was largely composed of those physicians most responsible for the once-renowned progress of German medicine—the medicine of Virchow, Koch, Ehrlich, etc.
The Great Depression smashed what vestiges of bargaining power remained to the doctors, and with it the door was opened to radical reform. With each German crisis, the welfare programs expanded: Bismarckian paternalism became Ludendorff's planned economy, and this in turn grew into the Welfare State of the Weimar Republic. When the latter got into trouble the combination of ultra-nationalism and superwelfarism swept over Germany, and because of it the world would never be the same again. Once more the political ethos of the Welfare State was demonstrated: that in a crisis the demagogue who promises more welfare for more people has the best chance for success.
The emerging constitutional dictator, Bruning, issued "emergency" decrees, such as the quarterly capitation fee—the amount of monies the doctor received from the State for the number of "heads" registered with him as patients. It was this invention of subtle bondage that was to set the pattern of physician remuneration for Holland and Britain in the future—Germany's bequest to its enemies.
In their new world of Bismarckian medicine, the German doctors constantly raged about their prerogative to prescribe for their patients. Finally, the issue was settled for them in 1935—by Hitler. The doctor could prescribe to his heart's content provided that his prescriptions per patient did not exceed the official monetary limit. Should the doctor exceed the statutory limit, or make an error, the malefactor-doctor was liable on both counts—unless he obtained a reprieve from the respective panel and its "trustee doctors"—and for this the errant doctor had to plead. For expensive medicines prior approval from the panel or the trustee doctor was mandatory. Refills of course were forbidden. (Now, four decades later and closer to home, once more the doctor's prerogative to prescribe for his patient is at issue, and if the health bureaucrats have their way the certainty is that "ole doc," in his provincialism, will be the prime target in the cross fire.)
If a proletarian may be defined as a member of that class of workers for whom daily sustenance depends upon the beneficence of an overlord, then it could be said of the German doctor, in the three decades following Bismarck, that his economic status was a steady deterioration to that state. By 1930, surgeons received the equivalent of $12 for an appendectomy; and to survive in the growing class struggle a general practitioner had to see up to 100 patients a day, with the aggregate "capitation fee" to the doctor less than what a barber received for a haircut.
But a new idea had been born and its time had come, so that by the beginning of World War II replicas of the Prussian model of authoritarian medicine had spread across Europe, embracing Britain, Norway, Iceland and Russia. Its watershed era was that period between 1943-46 when the parliamentary governments of liberated Europe were in shambles. Under these conditions far-reaching health care legislation was hurried through where, under normal conditions, debate and modification would have been possible. France, for example, in 1944 passed its social security law of left-wing coloration in a virtually empty Chamber of Deputies—a tactic not entirely foreign to our own champions in the Congress when it comes to the passage of pet or controversial legislature, as witnessed by the recent passage of the "PSRO" amendment to the Social Security Act.
If the strategy to divide and conquer is a psychologic maxim in the subjugation of a people or a class, it was never better applied than by Aneurin Bevan in the case of Britain's compulsory health care system. Modeled on the Soviet scheme of cradle to grave health care, and introduced to Parliament at a time when communists the world over were the darlings of the West, the shrewd Bevan staked his future, and that of his party, on an experiment so bold no one before Lenin had dared it: the best health care the country could provide—and all for nothing! Well, for him, Bevan's gamble paid off and he obtained his niche in history, but Britain had spawned a voracious beast. In 1946 Britain passed the National Health Service Act. The former panel system of Lloyd George was abolished; in its place was established the Ministry of Health. The medical profession was tolerated in an "advisory" capacity; but, whatever its views and opinions, in the final analysis, it remained to the Minister's discretion as to whether these views were heeded, much less published. The British practitioner was placed on a yearly capitation fee with his income dependent upon the number of "heads" registered with him. No consideration whatsoever was given to the number of consultations or visits involved in rendering the service; nor to the amount of time and ingenuity devoted to the individual case. Overnight, it seemed, the British people had become the master and the doctor the slave.
What must be grasped at the outset is that in all governmentalized systems of health care the doctor is the key figure. He determines who is sick—and for how long; he specifies the quantity and the quality of medicines dispensed (as brought out in the U.S. Senate subcommittee on health, the American Pharmaceutical Association would like to place the latter function in the hands of the corner druggist); the need for hospitalization, laboratory work, x-rays, surgery; and, because of his unique position in the system, it is the doctor who determines the cost of the system. It is the nettling item of costs—not the quality of care, that's left up to fate and the trustee (PSRO) wardens—that ultimately becomes the crux of all governmentalized health schemes. As the costs mount the expedient course for the bureaucracy is to indict a scapegoat, in this case, the doctors: lean hard on them; cut their fees; denounce them as greedy profiteers trafficking on the poor and the sick. Right or wrong, it is both a popular and a money saving device. Apropos to this kind of demagoguery is the action of the Israeli government in that country's recent doctor's strike, where the doctors' "inconvenience" to the populace was used as an effective weapon against the striking doctors. Citizens, it seems, are willing to trust their most priceless possessions—life and health—to the physician, but their perverse nature becomes manifest when they are called upon to lend a sympathetic ear to that same trust in matters politic and economic. Unfortunately, the citizenry seldom employs that same yardstick to measure the credibility and performance of its politicians.
Once in the saddle, Bevan recognized the connection between costs and the doctors in a compulsory health system. Realist that he was, he knew that the operating costs of his socialized medicine could never be controlled unless the doctors were subjugated; and, to effect this subjugation the "democratic" means lay in the systematic, relentless, legislative pauperization of the British physician. Having recognized the elemental logic in the new Realpolitic, Bevan drew the conclusion and acted with dispatch.
British doctors, before Bevan, provided for their retirement by selling their practices, but under Bevan this exercise of freedom was abolished. In its place the doctor was induced to government service where a retirement pension would be provided. Why was this most elementary property right—tantamount to the sale of good will or a patent right—summarily prohibited in democratic Britain, if it were not to emasculate the physician and force him into a rigid, governmentalized system where he could be regimented and controlled? It was, quite simply, the bold demonstration of the cardinal ethic in all egalitarian systems: the anathema held for the elite.
To their credit the British doctors did protest; but instead of standing on principle, they argued about technicalities: who was to be given hospital privileges; the kinds of honoraria. What the British doctor overlooked was that once the principle of compulsion was accepted the terms and the stipend of employment became immaterial. Now, the State would set the terms and the conditions of employment, depending on how it viewed the needs of the time.
How right did Bevan gauge the doctors' solidarity! When it came to the showdown on Bevan's health scheme 35 percent of Britain's medical profession defected to the State, including the top leadership of British medical and dental associations. The remaining majority was then coerced into submission by the substantial threat of losing all claim to compensation for the capital value of their practices. Just as their German counterparts four decades earlier, the British doctors, by submitting to a combination of intimidation and collaboration, surrendered their right to professional freedom, and to add injury to insult suffered, on the average, an immediate reduction in income by 25 percent!
With the German and British compulsory health experiences as a background, what have been the overall consequences of authoritarian medicine? What, for example, happens to the scope of compulsory medicine once it becomes the law of the land? To begin with, once it is accepted that the taxpayer is to participate in the cost of the program the basic barrier to expanding the system—from a limited medical insurance to an all-embracing medical security—is jettisoned. (Remember how modest America's Social Security Act began?) From here it becomes axiomatic for the system to expand horizontally: embrace more and more people—family members, occupations, the rich—until the entire population is included.
The second aspect of growth in a compulsory medical system is a vertical one: having enrolled the nation in totality, next what must be offered is more cash benefits, commodities and lengthened services, with less and less costs, ostensibly, to the recipient. In addition to hospitalization, supply aid to the family while the breadwinner is sick. Extend the period of treatment indefinitely; increase the benefits to match the cost of living (adding still another log to the fire of inflation). Ultimately reduce the recipients' participation to near zero, as in Italy and Poland, adding this cost to the employers' in the delusion that this kind of subsidy is somehow different from subsidies out of the general taxpayer's pocket.
The lateral, or horizontal growth of the health bureaucracy is one of the hallmarks of compulsory medical care. As the beneficiaries increase into the millions, and the benefits become multitudinous, the number of offices, agencies and health workers become legion as they expand and grow to meet the demand. In any event, the widening of coverage to more and more people often has little to do with actual need; rather, it is more in keeping with political imperatives. One fact is certain: once a compulsory medical system is established, even if bankrupt or totally unsatisfactory, it is never abolished. Always, means will be found to perpetuate the system, even if the means negate the purpose of the ends; and, in such circumstances, when conflicts arise between political objectives and financial realities invariably the doctor becomes the first victim.
On July 5, 1948, when Britain began the business of "free" medicine, the health budget was set at what was thought to be a "reasonable" 200 million pounds for the first nine months of operation. Eight months later the popularity of "free" teeth, spectacles, aspirin and tonsillectomies increased this figure by 75 million more pounds, as every man, woman and child flocked to partake of British benevolence. When the second year of such largess came around the health bill came to 350 million pounds—75 percent more than the Minister had estimated, just a short nine months earlier, and three times more than the Beveridge plan had gauged for 1955. Clearly, something was wrong, as grim reality descended upon Parliament. In its 1949 Select Committee on Estimates Parliament inquired of the Minister of Health: what went wrong? Nothing very much, really. Like America's Medicare budget, Britain's health budget, too, was estimated grossly—some would say, deceptively—low.
To the health visionary the consideration of costs in his world of compulsory health care may seem mundane and pedantic, but what emerges from a consideration of costs in a compulsory medical system is that once the principle of necessary health care is accepted—that it is a "right"—and access to it is opened at little or no expense to the recipient, the application of rational actuarial principles becomes impossible. Add to this the factor that when people are forced into a collective enterprise, or compelled to pay for a governmentalized system in which they share no responsibility nor take little interest in its welfare, they tend to abuse it and exploit it with a vengeance. If the recipient is required to contribute something to the system this acts as a further stimulus to maximize his demands for a return on his contribution. The result is an inflationary demand, and all moral exhortations notwithstanding, nothing checks this excessive participation.
In a system that places a premium on being sick, the dividing line between the sick and the worried well often is blurred and indistinct. Consider the conditions: here is a doctor, one among many (for one of the benefits of compulsory medicine is an increase in the supply—but not necessarily the quality—of doctors), existing on an income that beggars the tradesman, with his only avenue of escape—private practice—curtailed or abolished altogether, dependent upon the number of "heads" registered with him (if he is on a capitation basis)—and that number depending on the extent to which he obliges his patient, both in sickness benefits as well as ancillary considerations from the system. Under these conditions will the doctor refuse the questionable malingerer another week of medical leave, knowing that if he does the patient will, soon enough, find a more accommodating doctor around the corner? By the same token, will the doctor declare a patient healthy and risk the consequences of error when he has no time for proper diagnosis? When both the recourses of the patient and the State are formidable and stacked against him, as they are in Britain? Ethics notwithstanding, elementary human nature testifies to the contrary. And so, human nature being the cautious thing that it is, the expedient course for the doctor is to make a "safe" diagnosis: one that satisfies the patient and at the same time keeps the doctor from the scrutiny of the trustee doctors (Senator Bennett's PSRO wardens), trusting a good outcome to the wisdom of prudent nature, merciful Providence, the stars, etc., etc.
In the mechanism of compulsory medicine the danger to the doctor—and, ultimately, the patient—is not so much that the doctor is given a free rein to quick diagnosis and treatment on a surgical and pharmaceutical basis; rather, it is that compulsory medicine reduces the conscientious doctor to the level of a mechanized robot in the exercise of his professional duties. Here, then, is the doctor's crucial dilemma: rationalizing the needs of his patients with those of the State. How he solves it determines the bend of his conscience. Some reconcile themselves to their fate and cope; some, while there is still time, emigrate; and some merely go mad.
But there is another facet of compulsory health care commonly ignored, and that is, that like the "progressive" income tax and social security legislation, compulsory health care serves as a further means of wealth distribution. Only the distribution is not so much between capital and labor as it is between the beneficiaries. The chronic sick, the hypochondriac, the unproductive worker cling to the back of the system, drawing far and away more out of the system than they ever put into it, while the young, the healthy, the productive worker bear the brunt of the system and receive little or nothing for their contributions. These inequities tend to foster discontent, absenteeism and contribute much to the reduction of national productivity, which for a nation such as Britain, struggling for its competitive place in the sun, is a form of national suicide.
Compulsory medicine, so the argument goes, offers the inducement for the early detection of disease: diabetes, glaucoma, tuberculosis, hypertension, cancer—in this respect it is, most assuredly, right, which is no mean accomplishment and certainly is a testimony to its historical credit. But, it must be remembered, so did the charity clinics which were formerly available to the poor (a term which stands in much need of defining). In any event, it is probable that the same results could be obtained under free market conditions—albeit more slowly, perhaps—but without loss of quality medical care, and at far less cost and disruption to society.
Finally, two additional phenomena emerge that seem to accompany all compulsory health care systems. As the system expands—as invariably it will—its facilities and resources become overloaded and, where before, under free market conditions, there were patients who could not pay for what they needed, now, under compulsory medicine, there emerges the submarginal patient: the patient who cannot obtain that for which he has been taxed. But one wrong is not necessarily balanced by a right; and so, as the inequities mount, and human worth cheapens, the gap between compensation and effort widens to create still another class of patient: the "phantom" patient—the fictional patient created by the practitioner to pad out his capitation allowance in order to gain some economic leverage in a world that for the practitioner has become a Sisyphean existence.
Waste, corruption and mediocre medicine seem to be the common denominator operating in virtually all compulsory health care systems. That such systems succeed at all is due to the inherent decency attending a civilized society. It takes a long time to indoctrinate a civilized society in the expediency of fraud. Soon enough, however, a few smarten up and serve as a catalyst in the demoralizing process. Much like the "seasoning" influence exerted on juveniles confined to houses of correction, the operation of the system itself—the long office wait, the three-minute diagnosis, the hasty prescription, the endless red-tape, the crafty wink at flexible integrity, the total forfeiture of privacy and confidentiality—all serve as a practical education in the cynical art of extracting more and more for less and less.
The consummate tragedy in this systematic process of dehumanization is that ultimately the humanity involved—the doctor and the patient—become ground down into a kind of quid pro quo condition of degenerate symbiosis, in which the patient's propensity to cheat is traded off for the doctor's accommodating compliance.
Without doubt there is much room for improvement in the present day system of medical care and its delivery in the United States; but accomplishing the desired objective without coercive forces and bankrupting the nation is the crux in a democratic society. Oftentimes the pecuniary interest of the health professional—particularly when he functions as a vendor of ancillary health services—creates a conflict of interest that (sad-to-say, with few exceptions) operates to the subtle detriment of the patient. The captive surgeon, for example, functioning ostensibly under freedom's banner of independence and objectivity, but in practice operating at the referring behest of wealth-garnering colleagues, is not independent, objective nor free; and such a lackey is a menace to a trusting humanity, a mockery to freedom and a disgrace to his profession.
Admittedly, then, there are serious deficiencies in the American system of health care and its delivery, and while the corrective process may be proceeding at an agonizingly slow pace—for the reformers at least—nevertheless it is proceeding.
Yes, there is much wrong with the present fee-for-service system of health care in America, but, there are larger beams in the Nation's eye than the mote of fee-for-service medicine. Perhaps it will go down as the most absurd irony of our time that a political body (the Congress) whose polled credibility stands on a par with that of used car salesmen, is about to impose its collective judgment and direction upon another organization (the medical profession), whose overall conduct and accomplishments have earned it just about the highest esteem rating among the people it serves. Yet today that system of esteemed medical care is about to be replaced with a system of compulsory health care, despite the fact that nowhere has it been established that the availability of "free" health care, be it on an insurance basis or a security plan, has stimulated incentives, mitigated industrial strife, reduced absenteeism, forestalled radicalism, strengthened respect for law and order, or induced labor to disclaim higher than economic wages. Ironically, in all compulsory health schemes, as more and more resources are spent to combat physiological diseases, more and more psychological incentives for illness become fostered, and the net result for the long term is a steady deterioration in the quality of life.
As a laboratory science medicine may function satisfactorily under a totalitarian regime such as the garrison state of the Soviets, but as an art it can only flourish under freedom. If the sum total of humanity's progress has been toward the dignification of the individual, then under compulsory medicine it is due for a shocking setback. If anyone thinks the Constitution stands between him and totalitarianism let him ponder for a moment and recall that old Machiavellian maxim—the end justifies the means—that was trotted out so recently by the Supreme Court in the case of the Bank Secrecy Act. Failing that, if he does not believe in the capabilities of his government in the exercise of expediency let him reflect on the internment of Japanese-Americans during World War II. How does freedom die? "Not with a bang; but with a whimper."
In the real world—beyond the looking glass—the world of grim reality, where there is no such thing as the "free lunch," two and two still make four; and in the long run nobody gets anything for nothing. In the final, bitter analysis it comes down to the elementary fact of life that the national income, which is the sum total of the sweat and toil of us all, must pay for everything the nation consumes, unless it lives on handouts from abroad—and at this writing the Arabs do not appear to be disposed to "foreign aid" to America. No nation—including the U.S.A.—can provide more in health care than its economic production permits. Yet, if the most effective control on the consumption of a commodity—its price—is removed then, to keep the system in bounds, the necessity of imposing physical controls is created. It is in this connection that the greatest danger to the individual's liberty lies. For, as in no other field of social security legislation, governmentalized health care means direct intervention into more and more sectors of business activities, as well as the most intimate aspects of private life.
And next to a war the greatest adjunct to inflation is a compulsory health care system. For over 40 years now the American people have been warped into a position of Constitutional serfdom by the combination of mounting inflation and onerous taxation. If Australia's Robert Murdock is correct in his observation that no parliamentary democracy has survived an inflation rate of 15 percent longer than two years, then today, the United States, with an inflation rate in excess of 10 percent may be leaping not into the rosy future of Utopian Socialism, but rather into the hell of oblivion that engulfed the Roman Republic, and like that ancient model of government the Republic of the United States may endure only as an historical memory.
A quarter of a century ago Roscoe Pound, writing on the professions in society observed: "It should be remembered that the rise of the totalitarian state was coincident with the general reception of the idea of the service state and both have Marxian socialism in their pedigree. Each, in its way, postulates an omnicompetent administration by supermen. If experience may be vouched, that means, in the end, supermen under the direction of an ex-officio superman."
It is only a scant decade away until 1984, and already physicians are experiencing the heavy, arbitrary hand of the State in the administration of the Medicare program. It may well be that compulsory medicine will be the tripping mechanism that catapults this Nation into an Orwellian destiny. Caveat emptor.
A graduate of the University of Oregon Medical School, Dr. Boland is currently practicing medicine as an Ear, Nose and Throat physician in Thousand Oaks, California.
NOTES AND REFERENCES
 Melchoir Palyi, Compulsory Medical Care And The Welfare State (National Institute of Professional Services, Inc., Chicago, 1949). I am indebted to Professor Palyi's trenchant and discerning primer on the genesis of compulsory health care systems which is the major source of historical data used in this article.
 Program Status Report, Health Maintenance Organizations, February 1, 1974 (Health Services Administration, Department Health, Education and Welfare, March, 1974). This is a resume of P. L. 93-222: The Health Maintenance Organization Act of 1973, Section 1311 of this Act spells out the manner in which the Act will abridge Article X of the Constitution with respect to the preempting of certain States' rights.
 Harry and Ruth B. Schwartz, "Was Israeli doctors' strike a win, loss or tie?," Modern Medicine, March 18, 1974.
 Roscoe Pound, "The Professions in Society Today," New England Journal of Medicine, September 8, 1949.
This article originally appeared in print under the headline "Compulsory Medicine".
Start your day with Reason. Get a daily brief of the most important stories and trends every weekday morning when you subscribe to Reason Roundup.