San José State University
Department of Economics
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The AMA and Prepaid Medical Plans

In the days when the medical profession typically practiced price discrimination, charging wealthier patients several times what was charged poorer patients, prepaid medical plans were a grave threat for physicians who were part of the medical cartel. Consequently the American Medical Association (AMA), acting through local medical organizations, carried out a relentless and ruthless campaign against them.

Here is an excerpt from Reuben Kessel's article that deals with the medical establishment's campaign against prepaid medical plans.

The form and nature of this campaign was documented by the Chicago economist, Reuben Kessel, in his 1958 article in the Journal of Law and Economics, entitled "Price Discrimination in Medicine." The footnotes are displayed at the end of the excerpt in green between two horizontal lines.

Just as one would expect an all-out war to reveal a country's most powerful weapons, substantial threats to the continued existence of price discrimination ought to reveal the strongest sanctions available to organized medicine. For this reason, the opposition or lack of opposition to prepaid medical plans that provide medical service directly to the patient ought to be illuminating. Generally speaking, there exist two classes of medical insurance. One is the cash indemnity variety. Blue Cross and Blue Shield plans fall within this class.34 Under cash indemnity medical insurance, the doctor and patient are

able to determine fees jointly at the time medical service is sold just as if there were no insurance. Therefore, this class of medical insurance leaves unaffected the power of doctors to discriminate between differences in demand in setting fees. If anything, doctors welcome insurance since it improves the ability of the patient to pay. On the other hand, for non-indemnity type plans, plans that provide medical services directly as contrasted with plans that provide funds to be used to purchase desired services, payments are typically independent of income. Costs of membership in such prepayment plans are a function of family size, age, coverage, quality of service, etc., but are independent of the income of the subscriber. Consequently, such plans represent a means for massive price cutting to high income patients. For this reason, the reception of these plans by organized medicine constitutes an experiment for testing the validity of the discriminating monopoly model. If no opposition to these plans exists, then the implication of the discriminating monopoly model �that some mechanism must exist for maintaining the structure of prices� is invalid. On the other hand, opposition to these plans by organized medicine constitutes observable phenomena that support this implication. If such opposition exists, then it supports the discriminating monoply hypothesis in addition to providing evidence of the specific character of the sanctions available to organized medicine.

A number of independent observers have found that a systematic pattern of opposition to prepaid medical service plans, as contrasted with cash indemnity plans, exists. "In many parts of the county, organized medical bodies have been distinctly hostile to group practice. This is particularly true where the group is engaged in any form of prepaid medical care."35 "Early groups were disparaged as unethical. But within recent years active steps have been taken only against those groups offering a plan for some type of flat-fee payment."36 "There is reason to believe that the Oregon, the San Diego, and the District of Columbia cases exemplify a nationwide pattern of behavior by the American Medical Association and its state and county subsidiaries. What has come into the open here is working beneath the surface in other states and counties."37 This systematic pattern of opposition to single price medical plans has taken two distinct courses. These are (1) using sanctions in an effort to terminate the life of prepaid medical plans already in existence and (2) lobbying for legislation that would abort their birth.

There have been a number of dramatic battles for survival by prepaid non-price discriminatory medical plans resulting from the efforts of organized medicine to destroy them. These struggles have brought into action the most powerful sanctions available to organized medicine for use against price cutters. Consequently, the history of these battles provides valuable evidence of the character of the weapons available to the participants. For this purpose, the experiences of the following organizations are particularly illuminating: Farmers Union Hospital Association of Elk City, Oklahoma, the Kaiser Foundation of San Francisco and Oakland, Group Health of Washington, Group Health Cooperative of Puget Sound, Civic Medical Center of Chicago, Complete Service Bureau of San Diego, and the medical cooperatives in the State of Oregon. These plans are diverse, from the point of view of location, organization, equipment, sponsorship and objective. However, they all have one crucial unifying characteristic�fees or service charges are independent of income." Similarly, the experiences of Ross-Loos in Los Angeles and the Palo Alto Clinic in California are illuminating because these organizations both operate prepayment single price medical plans and nevertheless continue to stay within the good graces of organized medicine.

The founder and director of the cooperative Farmers Union Hospital in Elk City, Oklahoma, Dr. Michael A. Shadid, was harassed for a number of years by his local county medical association as a consequence of founding and operating this price cutting organization. He was ingeniously thrown out of the Beckham County Medical Society; this organization was dissolved and reconstituted apparently for the sole purpose of not inviting Shadid to become a member of the "new" organization. Before founding the cooperative, Shadid had been a member in good standing in his county medical association for over a decade.

The loss of hospital privileges stemming from non-county society membership was not sufficient for the task of putting Shadid out of business, because his organization had its own hospital. Therefore, organized medicine turned to its control over licensure to put the cooperative out of business. Shadid was equal to this challenge. He was shrewd enough to draw members of the politically potent Farmers Union into his organization. Therefore, in the struggle to take away Shadid's license to practice medicine, the farmers were pitted against the doctors. The doctors came out of this political battle the losers because the state governor at the time, Murray, sided with the farmers.39 However, the Beckham County Medical Society has been powerful enough to keep doctors who were known to be coming to Oklahoma to join Shadid's organization from getting a license to practice, powerful enough to frighten and cause the departure of a doctor who had been associated with Shadid's organization for a substantial period of time, powerful enough to keep Shadid out of a two-week postgraduate course on bone fractures at the Cook County Graduate School of Medicine (the course was open only to members in good standing of their local county medical societies), and was able to get enough of Shadid's doctors drafted during the war to endanger the life of his organization.40 In recent years, the tide of battle has turned. The Hospital Association brought suit against the Beckham County Medical Society and its members for conspiracy in restraint of trade. This case was settled out of court. As part of this settlement, the county medical association agreed to accept the staff of the cooperative as members.

The experience of the Kaiser Foundation Plan is parallel to that of the Farmers Union. Both were vigorously opposed by organized medicine. The medical staff in each case could not obtain membership in local county medical societies. In both cases, the plans were able to prosper despite this obstacle, since they operated their own hospitals. In both cases, the doctor draft was used as a tool in an attempt to put these plans out of business.41

Control by organized medicine over licensure was used as a weapon in an attempt to kill the Kaiser Plan. Dr. Sidney Garfield, the plan's medical director, was tried by the State Board of Medical Examiners for unprofessional conduct. Garfield's license to practice was suspended for one year and he was placed on probation for five years. However, the suspension was withheld pending good behavior while on probation. This ruling by the State Board of Examiners was not supported in Court. Superior Court Judge Edward P. Murphy ordered the board to rescind all action against Garfield. The judge ruled that the board was arbitrary in denying Garfield a fair trial. Subsequently the appellate court reversed the decision of the trial court on one count but not the second. Nevertheless the judgment of the trial court in rescinding the decision of the board of examiners was upheld. The entire matter was sent back to the board for reconsideration of penalty.42 Subsequently, Garfield was tried by the county medical association for unethical practices, namely advertising, and found guilty. However, he came away from this trial with only a reprimand and not the loss of his license." By virtue of having its own hospitals and legal intervention by the courts against the rulings of organized medicine, the Kaiser Foundation has been able to resist the onslaughts of its foes. However, the battle is not over vet. Although Kaiser Foundation doctors are now admitted to the Alameda County Society, the San Francisco County Society still excludes them.44

Group Health in Washington was not as fortunate as Kaiser or Farmers Union with respect to hospitals. Unlike these other two organizations, Group Health did not have its own hospital and therefore was dependent upon the existing hospitals in the community. Consequently, when Group Health doctors were ejected from the District Medical Society. Group Health was seriously crippled. Nearly all the hospitals in the district were coerced into denying staff privileges to Group Health doctors and bed space to their patients. Moreover, many doctors were deterred from becoming members of the Group Health staff because of fear of punitive action by the District Medical Society. Still other doctors who were members of the Group Health medical staff suddenly discovered attractive employment possibilities elsewhere and resigned their Group Health positions.45

It was fortunate for Group Health that it was located in Washington, D.C. and therefore under the jurisdiction of federal laws, in particular the Sherman Act. The tactics of the District Medical Society and the AMA came to the attention of the Justice Department. This led to the successful criminal prosecution of organized medicine under the Sherman Act. The opinion of the Supreme Court delivered by Mr. Justice Roberts pinpoints the primary concern of the petitioners, the District Medical Society and the AMA.

"In truth, the petitioners represented physicians who desired that they and all others should practice independently on a fee for service basis, where whatever arrangement for payment each had was a matter that lay between him and his patient in each individual case of service or treatment." 46

As a result of this victory, consumer sovereignty with respect to Group Health was restored. As might be suspected from the intense opposition of the AMA and the District Medical Society, Group Health has shown unusual survival properties and flourishes in competition with fee-for-service medical care. Since its victory at court, good relations with the District Medical Society have been achieved by the Group Health staff.47

In view of the previous cases cited, the experience of the Group Health Cooperative of Puget Sound, Washington, takes on a familiar cast. The King County Medical Association objected to this prepayment plan. They claimed it was "unethical" because under the terms of the plan subscribers could not employ any doctor in the community. Subscribers could use only doctors who were members of the health plan. Staff members of Group Health were expelled from the county medical association and new additions to the Group Health staff were found ineligible for society membership. The local medical society refused to accept transfers of membership from other county medical associations of doctors who expected to join the staff of the cooperative. The Group Health staff was unable to use the existing hospitals of the community, thereby limiting the value of the plan to many members and potential members. Moreover, the staff was cut off from many scientific meetings and was unable to consult with the orthodox members of the profession. However, the cooperative survived despite the hostility of the county medical society.

As a direct consequence of these harassing measures adopted by the King County Medical Society, the cooperative brought action against the county medical society, charging that the defendants had conspired against them in an effort to force the cooperative out of business. This case went to the state supreme court and was won by the cooperative although no damages were allowed.48 Mr. Justice Hamley said that

"The purpose of the Society . . . has been primarily to benefit the members of the Society and its affiliates through the elimination of such competition. The means employed has . . . been oppressive in the extreme. ..." 49

Subsequently, the justice went on to argue that the activities of the county medical association against Group Health were designed to eliminate competition in the contract medicine field.50 The court ruled that the defendants should not exclude applicants from membership in the county medical society or hospitals because of their affiliation with Group Health, and should cease discouraging doctors from joining Group Health or consulting with its staff."

In testimony before a Senate Committee, Dr. Lawrence Jacques of the Civic Medical Center in Chicago reported that none of the staff of this medical center (it numbered fifteen at that time) had succeeded in being admitted to the county medical association.52 Repeated applications for admission had either been ignored or rejected by the Chicago Medical Society. Appeals to the Illinois State Medical Society and the American Medical Association proved to be fruitless. A direct appeal by a committee of patients of the Civic Medical Center to the county medical association on behalf of their doctors was of little avail.

The doctors associated with the Complete Service Bureau of San Diego could not obtain membership in the county medical society and the patients and doctors associated with the plan were barred from the major hospitals of San Diego County. The county society published paid advertisements in the current editions of the San Diego telephone directory designating the members of the San Diego Medical Society among the physicians listed in the directory. These advertisements contained statements that gave the impression that non-society members were not qualified to practice medicine for professional and moral reasons. As a result of society opposition, the bureau had difficulty in hiring doctors at the going market price for their services.53

In Oregon, doctors serving on the staff of medical cooperatives were expelled from county medical societies and hospital facilities were made available only to doctors and the patients of doctors who were members in good standing of their local medical societies. Moreover, society members systematically refused to consult with non-society members and spread false propaganda in an effort to discredit society opposed plans.54 The government brought action against the Oregon Medical Society under the Sherman Act and lost.55

The Civic Medical Center in Chicago did not have its own hospital. The members of the center were able to practice in only two hospitals in the entire Chicago area, and in neither of these two hospitals did they have full staff privileges. These limited staff privileges seriously hampered the operations of the group in the two hospitals in which they could practice. For example. in one of the hospitals surgical cases could not be scheduled for more than two days in advance by a physician unless he was a full staff member.

In the words of Jacques,

"The handicaps of nonmembership in the local medical society are serious and far-reaching and in effect amount to a partial revocation of licensure to practice medicine."56

During the war, some of the men in this group were disqualified for service as medical officers in the Navy, but nevertheless draftable as enlisted men, because applications to serve as medical officers were automatically rejected unless accompanied by a letter certifying that the candidate was a member in good standing of his local county medical society.57 When Jacques was asked why his group was being excluded from the county medical association, his response was:

"The evidence at hand suggests . . . that we are being excluded because of our prepayment plan."58

Apparently the value of price discrimination is deemed to be so great that the AMA has opposed "free" medical care to veterans by the Veterans Administration.59 Free VA care for veterans would increase enormously the quantity of medical services demanded by making the marginal costs of these services zero for veterans.60 Moreover opposing free care to veterans comes at a great cost to organized medicine.61

If price discrimination is in fact highly valued by organized medicine and prepayment direct service medical plans have been opposed in order to maintain a structure of discriminating prices, doesn't the existence of the prepayment plans unopposed by the AMA constitute an anomaly?62

How can the Ross-Loos and Palo Alto Clinic cases be explained?63 The Ross-Loos plan in Los Angeles is a prepaid medical plan that is a profit-seeking organization. It was started in 1929 and by the end of 1952 had 127,000 members.`' The Ross-Loos plan does not have hospitals of its own and is therefore forced to rely on the existing hospitals of the community. Consequently, the condemnation of this plan by organized medicine which occurred after it won acceptance from consumers in the medical care market, represented an enormous threat to its continued existence. The Ross-Loos plan doctors were expelled from the Los Angeles County Medical Association. Among the doctors to lose their county society membership was a former President of the Los Angeles County Medical Society. As a result of a number of appeals to higher courts, all within the judicial machinery of organized medicine, the decision that would have crippled if not destroyed this plan was reversed.

An excellent reason for this reversal is suggested by the testimony of Dr. H. Clifford Loos, a co-founder of Ross-Loos. In response to the question, "Are you handicapped to any extent by the fact that you are not able to advertise," Dr. Loos replied:

As far as that goes, we do not care to be big, or bigger. If I had accepted all of the groups who applied to us. we would need our city hall to house us. We have put the brakes on. We can't accept too many. We feel we can't be too big.65

This constitutes strange behavior indeed for a profit-seeking institution that certainly ought to have no fears of Justice Department action for either being too large or monopolizing an industry. One cannot help suspecting that the amicable relations with the Los Angeles County Medical Society may have been acquired at the cost of a sharply curtailed rate of expansion.66

The Palo Alto Clinic in California provides prepaid medical care that is non-income discriminating to the students, employees, and faculty of Stanford University. This constitutes a small fraction of the clinic's business; Eighty-five per cent of the receipts of the clinic are attributable to conventional fee-for-service practice that lends itself to discriminatory pricing. This clinic continues to stay within the good graces of organized medicine. When questioned about extending the prepaid non-discriminatory service, Dr. Russel V. Lee, Director of the Clinic and Professor of Medicine in the School a Medicine of Stanford University, threw some light upon this apparent anomaly.

"Several of the industries in the area have come to us for such service We have been trying to get our county medical society approval before we ge into these things, and we are doing a little job of county medical education because in general the county medical society will not approve of anything that smacks of a closed panel."67

This suggests that the Palo Alto Clinic is in the position of having to go to its principal competitors for permission to sell its services to new customers. This is comparable to a requirement that a Ford dealer must first obtain the permission of his competing Chevrolet dealer before he can sell Fords to non-Ford owners who have asked for the opportunity to buy them. Probably the county medical society that includes the Palo Alto Clinic does not feel that the present level of sales of prepaid medical services by this clinic is high enough to justify the costs and risks of punitive action.

Organized medicine, i.e., the AMA and its political subdivisions, has opposed prepaid non-price-discriminatory medical plans not only directly by fighting against them but also indirectly by lobbying for legislation that would make such plans illegal. State medical societies have achieved a fair degree of success in sponsoring legislation designed to prevent price cutting in the medical care market caused by prepaid medical plans. As of 1954, "there are at least 20 states that have had such laws passed at the instigation of medical societies, which are designed to prevent prepaid group practice and to keep medical practice on a fee-for-service solo basis.68 Another source says:

"Most of the states now have restrictive statutes permitting only the medical profession to operate or to control prepayment medical care plans."69

Hansen lists as one of the primary objectives of this legislation "to preserve the fee-for-service system as far as possible by controlling the financial administration of the plans."70

31 Hyde and Wolff, op. cit. supra note 19, at p. 952.

32 A statement of sanctions similar to that noted above appears in Restrictions on Free Enterprise in Medicine, p. 9 (April 1949), pamphlet, Committee on Research in Medical Economics.

33 Other things being equal, old well-established concerns tend to be more hostile to price cutting than younger concerns." G. Stocking and M. Watkins, Monopoly and Free Enterprise, p. 117 (1951).

34 Most of these plans have services provisions; that is, they agree to provide the service required to treat particular ailments only if the subscriber's income is below some pre-assigned level. Of the 78 plans approved by organized medicine, 58 have service provisions. Of these, only 3 provide service to all income classes. The remainder provide a cash indemnity to subscribers whose income exceeds the relevant pre-assigned income levels. Therefore, these plans do not interfere with the discriminatory pricing, policies of doctors. Consult Voluntary Prepayment Medical Benefit Plans, American Medical Associat ion (1954).

35 Building America's Health, report to the President by the Commission on the Health Needs of the Nation, V. I, p. 34 (1952).

36 Hyde and Wolff, op. cit. supra note 19, at p. 977.

37 Op. cit. supra note 32, at p. 14.

38 The Health Insurance Plan of New York is not included in the foregoing enumeration hecause charges are not completely independent of income. For determining premiums, families are divided into two groups, those with incomes above $6,500 are assessed premiums twenty per cent greater than those applicable to the lower income group. Consult M. M. Davis, Medical Care for Tomorrow, p. 237 (1955). However, as a threat against the structure of prices for medical services based on income, this plan is almost as potent as those listed. Consequently, the opposition to it ought to be just about as severe and the weapons employed just as interesting for gaining insights into the nature of the sanctions over the behavior of individual doctors by organized medicine.

Available evidence suggests that HIP is under attack. See the testimony of G. Baehr, President and Medical Director of HIP in Hearings, op. cit. note 9, at pp. 1604, 1642, and 1663. Legislation that would outlaw such plans as HIP has been sponsored by organized medicine. Consult N.Y. Times, p. 15, col. 5 (Feb. 21, 1954).

39 Davis argues that Shadid would have lost his license to practice if he had not had the powerful political support of the farmers. Op. cit. supra note 38 at p. 229.

40 The story of Shadid and his organization may be found in A Doctor for the People (1939), and Doctors of Today and Tomorrow (1941). In Two Harbors, Minnesota, doctors associated with a medical-society-disapproved plan could not win admission to their local county medical society and a doctor associated with this plan could not get into the same school from which Shadid had been barred�the Cook County Graduate School of Medicine. 71 Christian Century, 173 (Feb. 10, 1954).

41 For evidence on this point for the Kaiser Plan, see Hearings before a Subcommittee of the Senate Committee on Education and Labor, pt. 1, p. 338 ff., 77th Cong. 2nd Sess. on S. Res. 291 (1942).

42 P. DeKruif, Life Among the Doctors, p. 416 (1949). The last two chapters of this book deal with the activities of organized medicine against the Kaiser Plan. For the decision of the appellate court, see Garfield v. Medical Examiners, 99 C. A. 2d 219, 221 P. 2d 705 (1950).

43 Mayer reports that Dr. Louis Schmidt, the urologist, was expelled from organized medicine for advertising his venereal disease clinic. 180 Harpers 27 (Dec. 1939).

44 Means, op. cit. supra note 5, at p. 131. Opposition to Kaiser also exists in Los Angeles area where this plan also operates. 83 Bull; tin of the Los Angeles County Medical Society 301 (1953) contains a condemnation of the Kaiser Plan and a call-to-arms.

45 Hyde and Wolff, op. cit. supra note 19, at p. 990.

46 American Medical Association v. United States, 317 T.S. 519, 536 (1943).

47 Becker, President, Group Health _Association. Hearings before Senate Committee on Education and Labor, pt. 5, p. 252S, 79th Cong. 2nd Sess. on S. Res. 1606 (1946).

48 Group Health Etc. v. King Co. Med. Soc., 39 Wash. 2d 586, 237 P. 2d 737 (1951).

49 Ibid., at p. 622 and 757.

50 Ibid., at p. 640 and 766.

51 Ibid., at p. 664 and 780; Consult Means, op, cit. supra note 5, at pp. 177-181.

52 Hearings, op. cit. supra note 47, at p. 2630 ff.

53 Op. cit. supra note 32, at p. 11.

54 Ibid.

55 For the reasons for this loss, see United States v. Oregon Med. Soc., 343 U.S. 326 (1.932) and the discussion of the case in Hyde and Wolff, op. cit. supra note 19, at p. 1020. One gets the impression from reading this case that the practices of the state society that would have led to victory for the government were discontinued in 1941.

56 Hearings, op. cit. supra note 47, at p. 2642.

57 Apparently this rule is no longer in effect. Consult Hyde and Wolff, op. cit. supra note 19, at p. 951 n. 34.

58 Hearings, op. cit. supra note 47, at p. 2644.

59 It seems likely that the value of price discrimination has increased in recent years. In the last two decades, there has been a widespread development of consumer credit. This development has made it possible for credit bureaus to collect extensive and reliable data on consumer incomes. Such data are available to subscribers to credit bureau services. Therefore, doctors that belong to credit bureaus are able to price discriminate more precisely than would have been possible if they had to rely on the unsupported testimony of patients for income data. ". . . routine credit check of patient who had always been billed at modest rates�and learned that he was in fact the owner of thirty oil wells!" Mills, Credit Ratings: How You Can Use Them, 33 Medical Economics 171, 172 (May 1956).

60 AMA opposition to free medical care for veterans constitutes evidence against the hypothesis that the AMA opposes direct service non-indemnity type group plans because they increase the efficiency with which medical resources are employed and therefore effectively increase the supply of doctors. Still stronger evidence against the rationalization of opposition to direct service prepayment p'ans as a manifestation of opposition to chances that increase the efficiency with which the existing stock of doctors can be utilized, i.e., increase the supply schedule of physicians services, is the relative lack of opposition to group practices. Therefore, unless one is willing to postulate that it is the method of payment associated with prepayment medical plans that is a source of efficiency, one cannot argue that opposition to prepayment plans is on a par with the destruction by workers of machines that improve workers' efficiency.

"Group practice of medicine on a fee-for-service basis is tolerated and even admired by most doctors. The entire profession also strongly advocates voluntary medical insurance. Yet many physicians and some local medical societies violently disapprove of the combination of group practice with pre-payment and do everything in their power to present or destroy it." Baehr, Hearings, op. cit. supra note 9, at p. 1642.

61 This opposition has won organized medicine a powerful foe. A. J. Connell, an ex-National Commander of the American Legion has attacked organized medicine as a "most powerful and monopolistic medical guild." N.Y. Times, p. 17, col. 3 (Jan. 29, 1954). In opposing "socialized medicine" these two groups were allies.

62 Evidence of opposition to price cutting on a more modest scale exists. Individuals who have cut prices have either encountered the sanctions of organized medicine or a threat to employ these sanctions. Consult, Medical Group's Protests Stop Polio Shot Project in Brooklyn, N.Y. Times, p. 33M (Sept. 12, 1956). The Los Angeles Times reports that Dr. Sylvan O. Tatkin filed a complaint in the Superior Court of Los Angeles charging that the local association was engaging in unlawful rate fixing. Tatkin charged that he was refused membership in the local society and therefore dropped from the staff of Behrens Memorial Hospital in Glendale as a result of price cutting. L.A. Times, sec. 2, p. 30, col. 4 (June 29, 1956).

Economic theory implies that there would be no point for a monopolist that has control over supply being concerned with prices directly. For a non-discriminating monopolist, control over supply implies control over prices.

63 There is evidence that opposition to prepayment plans is not merely local society policy. In Logan County, Arkansas, the entire county society was expelled from the state society by means of charter revocation. The local society was dominated by physicians participating in a disapproved plan. 27 Journal of the Arkansas Medical Society 29 (1930).

64 Hearings, op. cit. supra note 9, at p. 1451.

65 Ibid., at p. 1469.

66 Loos has also served as an expert witness for the San Diego County Society during its struggle with another prepayment plan. Complete Service Bureau v. San Diego County, Med. Soc., 43 C. 2d 201, 212, 272, P.2d 497, 504 (1954). Hyde and Wolff. op. cit. supra note 19, at p. 985 impute the tolerance of Ross-Loos by organized medicine to the fact that it is physician sponsored as contrasted with being lay or non-physician sponsored. The theory, outlined in this paper implies that this is not a relevant distinction.

67Hearings op. cit. supra note 9, at p. 1559.

68 Baehr, Hearings, op. cit. supra note 9, at p. 1594. Very unorthodox lobbying tactics have been successfully employed by distinguished doctors to achieve the legislative goals of organized medicine. See Osler's forthright description in H. Young. A Surgeon's Autobiography, p. 407 (1940).

69 Hansen, "Laws Affecting Group Health Plans," 35 Iowa L. Rev. 209, 225 (1950).

70 Ibid., at p. 209. Yet in his conclusion, Hansen argues that "Farsighted medical societies should find no valid reason for opposing group health enahing legislation. Instead they should welcome experimentation in the field of medical economics with the same spirit they welcome it in the field of medical science." pp. 235-36. It is one of the implications of this paper that the more farsighted medical societies provide the strongest opposition to experimentation in the field of medical economics.

Arranging for the drafting of physicians who are a threat to the medical cartel is probably as ruthless as possible short of the tactics of the Mafia. When this tactic was revealed to a friend she revealed a related case. A South African doctor became a resident of the U.S. during the time of the Vietnamese War. He did not apply for citizenship. After aquiring a license to practice medicine he received notice that he was to be drafted. His reaction was "They can't do this; I am not a citizen." He was so upset that he got into his automobile and drove to Washington, D.C. to protest his draft notice. It did him no good. He found that he could be drafted and was drafted. Physicians from foreign countries seeking to practice in the U.S. have always been a threat to the cartel arrangement that limits the admissions into U.S. medical schools.

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