The evolution of the health care system

The Evolution of the The Evolution of the Health Care SystemHealth Care System

Robin Cleeland, Ph.D., LCSWRobin Cleeland, Ph.D., LCSW

English Poor Law TraditionEnglish Poor Law Tradition

Bias against federal and state action Bias against federal and state action in regard to social welfare.in regard to social welfare.

Adopted English poor law tradition.Adopted English poor law tradition. Only local gov’t has the authority, Only local gov’t has the authority,

right, and obligation to provide right, and obligation to provide benefits.benefits.

Benefits are provided to the Benefits are provided to the “deserving poor.”“deserving poor.”

Local Government Local Government InitiativesInitiatives

Local governments did engage in Local governments did engage in some public health initiatives in the some public health initiatives in the 1818thth, 19, 19thth and early 20 and early 20thth centuries. centuries.

Built public hospitals and public health Built public hospitals and public health clinics.clinics.

Created health codesCreated health codes Minimal in nature and directed toward Minimal in nature and directed toward

the aged, disabled and deserving the aged, disabled and deserving poor.poor.

Health Care w/o Health Care w/o GovernmentGovernment

Most people received health care at Most people received health care at home.home.

Traditional healers.Traditional healers. Midwives.Midwives. Faith healers.Faith healers. Herbalists.Herbalists. Doctors existed but were not like Doctors existed but were not like

today.today.

The Rise of Physicians and The Rise of Physicians and HospitalsHospitals

State became involved in regulating State became involved in regulating the sale of potions, herbs, and the sale of potions, herbs, and medicines.medicines.

Physicians were recognized by state Physicians were recognized by state regulators as “providers of choice.”regulators as “providers of choice.”

From late 1800’s to early 1900’s, From late 1800’s to early 1900’s, hospitals took a central role.hospitals took a central role.

HospitalsHospitals

Prior to the late 1800’s, the nation Prior to the late 1800’s, the nation had few hospitals.had few hospitals.

Hospitals that existed in U.S. were Hospitals that existed in U.S. were usually run by local counties or usually run by local counties or charitable organizations.charitable organizations.

Hospitals almost exclusively served Hospitals almost exclusively served the poor, indigent, aged, and disabled.the poor, indigent, aged, and disabled.

Poor conditions for poor people.Poor conditions for poor people.

Factors that Changed Factors that Changed HospitalsHospitals

The technology of medicine changed.The technology of medicine changed. The nursing profession changed.The nursing profession changed. The U.S. became more urban and The U.S. became more urban and

industrialized.industrialized. Hospitals developed new means of Hospitals developed new means of

treating people.treating people. Medical education changed. (Flexner)Medical education changed. (Flexner)

Changes in HospitalsChanges in Hospitals

As a result of all of these factors, As a result of all of these factors, there was a dramatic rise in the there was a dramatic rise in the number of hospitals during the 20number of hospitals during the 20thth century.century.

In 1873, the U.S. had approximately In 1873, the U.S. had approximately 178 hospitals. By 1900, the number 178 hospitals. By 1900, the number had reached 4,000. By 1930, the had reached 4,000. By 1930, the U.S. had 7,000 hospitalsU.S. had 7,000 hospitals

Hill-BurtonHill-Burton

The Hill-Burton Program, enacted in The Hill-Burton Program, enacted in 1946, provided federal dollars for 1946, provided federal dollars for communities to build hospitals around communities to build hospitals around the country. the country.

The program represented the federal The program represented the federal government’s first substantial government’s first substantial contribution to the health-care system. contribution to the health-care system.

The goal was to establish a hospital in The goal was to establish a hospital in every community in the U.S.every community in the U.S.

The Cost of Health CareThe Cost of Health Care

With the growing number of hospitals With the growing number of hospitals and the increasingly sohisticated and the increasingly sohisticated medical precedures, came and medical precedures, came and increase in the cost of health care.increase in the cost of health care.

At the same time, the ability of At the same time, the ability of patients to pay was declining—patients to pay was declining—particularly during the Great particularly during the Great Depression.Depression.

Paying for Health CarePaying for Health Care

Hospital administrators ere concerned Hospital administrators ere concerned about how to support their new facilities.about how to support their new facilities.

Pre-pay agreements began in the 1920’s Pre-pay agreements began in the 1920’s and allowed hospitals to enter and allowed hospitals to enter agreements with employers if they paid a agreements with employers if they paid a set fee for every employee in advance.set fee for every employee in advance.

Hospitals, employers, and consumers Hospitals, employers, and consumers were unhappy with this model.were unhappy with this model.

The Birth of the BluesThe Birth of the Blues

The American Hospital Association The American Hospital Association entered into talks with state regulators entered into talks with state regulators to create a new kind of insurance plan to create a new kind of insurance plan based on third-party payers.based on third-party payers.

The regulators insisted that the plans The regulators insisted that the plans be non-profit.be non-profit.

Blue Cross and Blue Shield were born.Blue Cross and Blue Shield were born.

Government Encourages the Government Encourages the Third-Party SystemThird-Party System

The U.S. retained its limited government The U.S. retained its limited government philosophy.philosophy.

However, insurers, providers, and However, insurers, providers, and employers all accepted help from the employers all accepted help from the government.government.

Govt. made health insurance tax Govt. made health insurance tax deductible.deductible.

Health insurance was exempt from the Health insurance was exempt from the wage freeze during WW II. wage freeze during WW II.

Commercial InsuranceCommercial Insurance

Commercial companies wanted to share the Commercial companies wanted to share the success of BC/BS.success of BC/BS.

Targeted healthy people.Targeted healthy people. Charged lower premiums that BC/BS.Charged lower premiums that BC/BS. The government encouraged the The government encouraged the

competition.competition. As a result there was a tremendous growth As a result there was a tremendous growth

in employer-sponsored private insurance.in employer-sponsored private insurance. In 1988, more than 140 million Americans In 1988, more than 140 million Americans

had private health insurance.had private health insurance.

The New DealThe New Deal

Roosevelt sought to use the Roosevelt sought to use the government to save the economy government to save the economy and provide health care.and provide health care.

He wanted national health insurance, He wanted national health insurance, but the AMA was opposed.but the AMA was opposed.

Roosevelt compromised and created Roosevelt compromised and created a welfare system that includes a a welfare system that includes a social-insurance wing and a welfare social-insurance wing and a welfare wing.wing.

Hospital Insurance for the Hospital Insurance for the AgedAged

Truman proposed national health Truman proposed national health insurance, but lost.insurance, but lost.

The American view has been that The American view has been that health care is not a right; it is a health care is not a right; it is a benefit purchasable by those who benefit purchasable by those who can afford it.can afford it.

Truman proposed hospital insurance Truman proposed hospital insurance for the aged and lost.for the aged and lost.

Medicare and MedicaidMedicare and Medicaid

LBJ won the presidential election in a LBJ won the presidential election in a landslide and had a democratic landslide and had a democratic majority in Congress.majority in Congress.

For the first time since FDR, the For the first time since FDR, the Congress had the ability, the votes, Congress had the ability, the votes, and the power to enact and the power to enact comprehensive health legislation.comprehensive health legislation.

Johnson decided to propose health Johnson decided to propose health insurance for the aged.insurance for the aged.

As a result of a compromise:As a result of a compromise:

Johnson’s proposal for hospital Johnson’s proposal for hospital insurance was enacted as Medicare insurance was enacted as Medicare Part A.Part A.

The Republican proposal for The Republican proposal for physician insurance for the aged physician insurance for the aged became Medicare Part B.became Medicare Part B.

The AMA proposal to expand welfare-The AMA proposal to expand welfare-medicine became Medicaid.medicine became Medicaid.

Community Health CentersCommunity Health Centers

The program, enacted in 1965, established The program, enacted in 1965, established community centers that were clinic-based community centers that were clinic-based and oriented toward primary and and oriented toward primary and preventive care.preventive care.

The model sought to allow local groups to The model sought to allow local groups to develop their own kinds of health care develop their own kinds of health care programs.programs.

These centers were initially funded by the These centers were initially funded by the federal government and later by Medicaid.federal government and later by Medicaid.

MedicaidMedicaid

Enacted in 1965Enacted in 1965 Funded jointly by federal and state Funded jointly by federal and state

governments.governments. In 200, Medicaid provided health In 200, Medicaid provided health

insurance to 40 million low-income insurance to 40 million low-income Americans at a cost of approx. $200 Americans at a cost of approx. $200 billion a year.billion a year.

Roots of Managed CareRoots of Managed Care

Prepaid health care existed in the Prepaid health care existed in the 1919thth century, but most providers century, but most providers opposed it.opposed it.

Uncomfortable with prepayment.Uncomfortable with prepayment. Providers who took prepayment Providers who took prepayment

risked bearing some of the expenses risked bearing some of the expenses associated with treating consumers associated with treating consumers who have high costs.who have high costs.2121

Problems with the Traditional Problems with the Traditional SystemSystem

By the 1960s and 1970s, there were 3 By the 1960s and 1970s, there were 3 major problems with the traditional major problems with the traditional system:system:

-rising costs-rising costs

-variations in care-variations in care

-uncoordinated care-uncoordinated care

The Rise of Managed CareThe Rise of Managed Care

Capitated prepaid system—the Capitated prepaid system—the incentive is to provide less care incentive is to provide less care instead of more.instead of more.

By directly hiring physicians, prepaid By directly hiring physicians, prepaid plans can reduce physician plans can reduce physician autonomy—create practice autonomy—create practice guidelines.guidelines.

Instituted gatekeeper systems.Instituted gatekeeper systems.

Problems with Managed Problems with Managed CareCare

Patients may lose ability to choose Patients may lose ability to choose any doctor.any doctor.

Physicians resisted loss of autonomy.Physicians resisted loss of autonomy. Changed fiscal incentives.Changed fiscal incentives.

The Government and Managed The Government and Managed CareCare

Congress passed the HMO Act of Congress passed the HMO Act of 1973 which set aside federal money 1973 which set aside federal money to help spur the growth of HMOs to help spur the growth of HMOs around the country and required around the country and required large employers to offer their large employers to offer their employees and HMO option.employees and HMO option.

This was an attempt to deal with the This was an attempt to deal with the health care crisis.health care crisis.

The Crisis ContinuesThe Crisis Continues

Americans were not ready for HMOs Americans were not ready for HMOs in 1973.in 1973.

By the mid-1980s, large employers By the mid-1980s, large employers started to complain that they were started to complain that they were spending too much money on health spending too much money on health care and started looking at managed care and started looking at managed care for a solution.care for a solution.

IRA’s and PPO’sIRA’s and PPO’s

HMOs were unpopular because consumers HMOs were unpopular because consumers couldn’t choose their doctors.couldn’t choose their doctors.

IRAs (independent practice associations) IRAs (independent practice associations) gave patients ability to choose from an gave patients ability to choose from an approved list of MDs and see them in their approved list of MDs and see them in their own offices.own offices.

POSs allowed consumers to see a doctor POSs allowed consumers to see a doctor outside of the approved list for a higher outside of the approved list for a higher fee.fee.

Managed Care GrowsManaged Care Grows

During the 1990’s, managed care During the 1990’s, managed care experienced phenomenal growth.experienced phenomenal growth.

Managed-care plans became looser Managed-care plans became looser in an attempt to satisfy consumer in an attempt to satisfy consumer demands for choice and physician demands for choice and physician demands for autonomy.demands for autonomy.

Rising costs are again creating a Rising costs are again creating a crisis for managed care.crisis for managed care.

Legislating Managed CareLegislating Managed Care

Bind between pleasing consumers Bind between pleasing consumers and managing costs.and managing costs.

Patient protection laws.Patient protection laws. Employers choose to self-insure to Employers choose to self-insure to

avoid legislation.avoid legislation.

Suing HMOsSuing HMOs

80%-85% of Americans belong to health plan 80%-85% of Americans belong to health plan that prohibits them from bringing to state that prohibits them from bringing to state court a claim for wrongful denial of coverage.court a claim for wrongful denial of coverage.

Most people have to bring the claim to Most people have to bring the claim to federal court where the awards would be federal court where the awards would be smaller.smaller.

Pres. Bush wants to limit awards to $500,000 Pres. Bush wants to limit awards to $500,000 total.total.

Advocates argue that the threat of litigation Advocates argue that the threat of litigation creates accountability.creates accountability.

Questions for DebateQuestions for Debate

Is health care a right?Is health care a right?Should the U.S. have national health Should the U.S. have national health

insurance?insurance?Should there be caps on medical Should there be caps on medical

malpractice awards?malpractice awards?Does managed care work?Does managed care work?What is the responsibility of Americans What is the responsibility of Americans

for limiting health care costs?for limiting health care costs?