"Policy." That's what it has to do with anything. It was implemented either in an official capacity or was at least tolerated by people in official capacities. If they didn't know (and I find that unlikely), the fact that it went on long enough to become a notable problem shows that larger organizational structures are incapable of dealing with crisis and cracks.
ALL political and economic systems fail when burdened with high capacity. Without exception. The problem is that there are almost no people with the mental, moral, and ethical capacity to self-govern. So you get a society, economy, and government that is fractured.
I'm no fan of socialized medicine, but I don't see what it has to do with this.