1929 Health Care Spending

In The O’ConnorReport’s continuing review of the Committee on Cost of Medical Care’s  (CMCC) recommendations , we now look at how preventive care fared in 1929 and where health care dollars were spent. The Committee’s focus on prevention is key to some of their future recommendations. 

The CCMC also spent some time examining the crisis in access to dental care services, which we will examine later.

Context:  Prevention:   This is 1929. The Stock Market has crashed, sparking the Great Depression. Health insurance does not yet exist, although its first forms will emerge because of the Depression.   This is also before penicillin and antibiotics, before diseases could be cured.  

“Although many practitioners suffer from enforced idleness, the American people need far more of the health care services which could be provided on the basis of present knowledge and facilities. This is particularly true of preventive serives.”

The Report notes that in any given year less than 7% of the public had a partial or complete physical examination. 

Less than 5% are vaccinated against diphtheria or other diseases.

A White House Conference on Children in the 1920s or 30’s found:

  • Only 51% of city children and 37% of rural children had had one or more health examinations prior to their sixth birthday. 
  • Only 13% of children had a dental exam by their sixth birthday
  • Only 21% of urban children and 7% of rural children had been vaccinated by the time they were six. 

 The Report suggests many factors limit preventive care:

  • People hesitate to see a doctor unless they are sick
  • Fee for service payments is an economic deterrent to preventive services that are not therapeutic in nature
  • Too few practitioners live and practice in rural areas
  • “The training of many practitioners and the avowed scope of many hospitals and clinics cause them to pay little attention to the preventive aspect of services.” (CCMC, pg. 12)
  • “…a physician who is aware of a patient’s needs for preventive work may refrain from urging it because he does not wish to appear to solicit practice.”  (CCMC. op.cit.)

The Report also noted that American communities “have been pitifully backward in utilizing modern public health procedures.”  (CCMC, pg. 13).  It further indicated that of the $30 per capita spent on health care,  only $1 was for public health services. “Niggardly appropriations for public health work not only seriously limit present activities, but also hamper medical schools in their efforts to attract competent students to public health careers, thus weakening the public health work of the future.” (CCMC, op.cit.).

Where the 1929 Health Care Went

Context:  In 1929, most physicians were in private practice, commercial pharmaceutical products did not exist as we know them today. Indeed, the current  PhRMA (Pharmaceutical Research and Manufacturers Association) was not formed until  1958.   The Report uses terms such as ‘cultists’ and ‘patent medicines’ to describe some health care provider and services while not defining them in any specific way. 

 The Report outlines a private medical system and it speculates it will remain a largely personal service. It did go  on to add, however:  “Contrary to the trend in most other human services, an increased division of labor (specialization) and a larger capital investment in buildings and equipment have in general tended to increase costs rather than decrease them.” (CCMC,pg. 13).

Comment: This is essentially what is said today about the increasing use of MRI and other medical testing.

The Report continues:  In 1929, the US spent $3,656 million (or $3.7 billion) for health care services, “including those purchased indirectly through taxes and other community funds.”

 As the Report says: “This represented 4% of the GDP.”  This was not an excessive cost, according to the Committee when compared to what was spent on other parts of the economy:

$5.8 billion—tobacco, toilet articles, and recreation;  $9.5 billion—automobile use and other travel (CCMC pg. 14)

 “It is probable that, with a better distribution of the burden and growth of national income which is probable in the next two to three decades, far larger amounts will be spent advantageously and without hardship. An increased national income can be used in only three ways:  to purchase more  consumer ‘s goods, to purchase more services or to provide savings.  Since the country is now suffering, in part, from an excess of savings in the form of capital goods, a large increase of productive facilities is not called for.

While there is at present an under consumption of food, clothing, housing and commodities in general, the increase in national income during the next ten or twenty years would yield the largest satisfactions if a large proportion of it were spent for services, especially for medical care, education and cultural pursuits.”  (CCMC  pg. 14)

 But the Report suggests re-directing some parts of the nation’s expenses:  “Of the $3,566 million spent annually for medical service, $125 million is spent on chiropractors, naturopaths, and allied groups, and faith healers and $360 million for ‘patent medicines.”  (CCMC  pg.15).  The Report suggested re-directing these dollars, but did not specify where.

 Health Care Spending 1929

1929                                                                                        2007

  • Physicians            29.8%                                                   Hospitals                 30.8%
  • Hospitals             23.4%                                                    Physicians               21.2%
  • Medicines           18.2%                                                    Other                        16.4%
  • Dentists              12.2%                                                     Other personal                
  • Nurses                  5.5%                                                           health                 13.0%
  • All others             4.2%                                                     Prescriptions            10.1%
  • Cultists                3.4%                                                     Nursing homes           6.1%
  • Public health      3.3%                                                     Home Health              2.2%

(CCMC pg.15)                                                            Source: Kaiser Family Foundation

 2007 Source: Kaiser Family Foundation calculations using NHE data from Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at http://www.cms.hhs.gov/NationalHealthExpendData/

iNote: Other Personal Health Care includes, for example, dental and other professional health services, durable medical equipment, etc.

Other Health Spending includes, for example, administration and net cost of private health insurance, public health activity, research, and structures and equipment, etc.

Coming Next Week:  CCMC’s Family income and Disproportionate Distribution of Health Care Costs

About Kathleen

Kathleen O’Connor: 30+ year health care consumer advocate, non-profit executive and author. For more information about Kathleen, please see "About" on the main content bar above.
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