“When I started medicine, there was no Medicare or Medicaid, and nobody was out in the streets without it.”

-- Ron Paul, during a CNN debate in Jacksonville, Fla., Jan. 26, 2012

“When I got out of medical school in 1961, I practiced for a couple years before there was Medicaid. I worked in a Catholic hospital and didn't make hardly any money. Nobody was turned away, and people were treated. And back in those days, people weren't laying in the street with no medical care. Doctors always charged the least. Now, with the government coming in, with these programs that aren’t — you know, they’re totally bankrupt — everybody charges the most, everybody from the doctors to the labs to the hospitals.”

— Paul, during town hall meeting in Manchester N.H., Dec. 19, 2011

These comments reminded us of the character-probing question that CNN moderator Wolf Blitzer threw at Paul during the Sept. 12 debate in Tampa: Should society allow an uninsured 30-year-old to die from lack of medical care? You may recall that a portion of the audience erupted with a chorus of yeahs.

The libertarian congressman suggested people should embrace personal responsibility, and he described Blitzer’s hypothetical as implausible, since hospitals don’t turn people away for lack of money or insurance coverage. Paul has said repeatedly that life before Medicare and Medicaid wasn’t so bad.

We wondered about the state of health care for the elderly and poor just before those social programs took effect in the mid 1960s. Let’s take a tour down memory lane.

The Facts

The federal government implemented Medicare and Medicaid as part of the Social Security amendments of 1965, providing coverage for senior citizens and the poor, respectively. Payroll taxes pay for most of the Medicare expenses, while various state and federal taxes cover Medicaid costs.

We stuck to Medicare for this analysis, because no pre-Medicaid reports are readily available to tell us about access to health care for the poor.

As our colleagues at FactCheck.org pointed out, the U.S. Department of Health, Education and Welfare issued a report in 1959 that said the elderly faced disproportionate risk of illness, yet had less means — mostly because of fixed incomes — to afford medical care.

A later study from the Social Security Administration made similar conclusions, as we learned from PolitiFact. The 1963 Survey of the Aged showed that seniors were paying especially high medical costs because they needed more care and that median costs for elderly couples needing hospital care reached about $7,000 a year in today’s dollars.

A Social Security Administration analysis of the survey said: “Many aged persons never recover from the economic effects of a single hospital episode. Unfortunately, the heaviest burden is likely to fall on those with the least resources,” and “even for the insured there is no present guarantee against dependency in old age caused by catastrophic medical expenses.”

These reports indicate medical costs could easily have reached the point of disaster for senior citizens before the Medicare era, but they don’t disprove Paul’s point that charitable organizations kept the elderly from suffering in the streets.

In fact, the 1963 survey suggests that assistance was available to some extent for those who couldn’t afford it. It said that nine percent of the married elderly and 16 percent of non-married seniors received free care to one degree or another.

Accounts of charitable care were also fairly common before Medicare, and Paul swears he still provides free services for Medicaid and Medicare patients to this day without charging the government.

But many experts say that vast improvements in medicine and the accompanying cost increases since the 1960s make Paul’s dream regression scenario unsustainable.

“Not having insurance would be a bigger barrier to health care today,” said Paul Ginsburg, president of the nonpartisan Center for Studying Health Systems Change. “It would have more dire consequences, as well.”

Most seniors without Medicare would also lack the means to treat and properly control chronic conditions, according to Henry Aaron, a senior fellow and health care policy expert with the Brookings Institution. “If you’re not insured, and things are getting increasingly expensive, you end up having to make some hard choices,” he said.

As for the whole suffering-in-the-streets scenario, Ginsburg said seniors in the days before Medicare faced a greater risk of unbearable expenses than of being denied treatment.

Aaron said it’s probably rare that a physician would deny care to a patient he or she meets face to face, but that doesn’t mean the elderly or poor should have to rely on such charity. “It’s sort of odd to say the world’s a better place when people don’t have health insurance,” he said.

In terms of Paul’s notion that government benefits provide a perverse incentive for doctors to charge more, that’s not possible with strict price controls in place for Medicare and Medicaid. Theory has it that providers just shift costs to the privately insured rather than absorb them, but Ginsburg said only the most elite hospitals can do that for fear of being dropped by insurers. Most will instead change their production processes to cut costs, he said.

The Washington Post’s Jennifer Rubin has written about the negligible effect of such cost-shifting.

The Pinocchio Test

We can’t disprove Paul’s assertion that people weren’t “laying in the street with no medical care” before 1965, but the argument seems like a red herring, anyway. The bigger issue, at least with Medicare, was whether health care costs were breaking the bank for seniors. That seems to have been a serious risk in the 1960s, and experts suggest it would be even more of an issue if the government killed Medicare and Medicaid today.

In terms of Paul’s suggestion that government medical benefits have triggered exponential growth in costs, most experts disagree with his assumption. Hospitals appear be eating the costs and working toward greater efficiency rather than passing the burden along to insurance companies.

Overall, given that rosy accounting, Paul earns Three Pinocchios.

Three Pinocchios

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