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The Evolution of the Health
      Care System

   Robin Cleeland, Ph.D., LCSW
English Poor Law Tradition

   Bias against federal and state action in
    regard to social welfare.
   Adopted English poor law tradition.
   Only local gov’t has the authority, right,
    and obligation to provide benefits.
   Benefits are provided to the “deserving
    poor.”
Local Government Initiatives
   Local governments did engage in some
    public health initiatives in the 18th, 19th
    and early 20th centuries.
   Built public hospitals and public health
    clinics.
   Created health codes
   Minimal in nature and directed toward the
    aged, disabled and deserving poor.
Health Care w/o Government
   Most people received health care at home.
   Traditional healers.
   Midwives.
   Faith healers.
   Herbalists.
   Doctors existed but were not like today.
The Rise of Physicians and
               Hospitals
   State became involved in regulating the
    sale of potions, herbs, and medicines.
   Physicians were recognized by state
    regulators as “providers of choice.”
   From late 1800’s to early 1900’s, hospitals
    took a central role.
Hospitals
   Prior to the late 1800’s, the nation had
    few hospitals.
   Hospitals that existed in U.S. were usually
    run by local counties or charitable
    organizations.
   Hospitals almost exclusively served the
    poor, indigent, aged, and disabled.
   Poor conditions for poor people.
Factors that Changed Hospitals
   The technology of medicine changed.
   The nursing profession changed.
   The U.S. became more urban and
    industrialized.
   Hospitals developed new means of
    treating people.
   Medical education changed. (Flexner)
Changes in Hospitals
   As a result of all of these factors, there
    was a dramatic rise in the number of
    hospitals during the 20th century.
   In 1873, the U.S. had approximately 178
    hospitals. By 1900, the number had
    reached 4,000. By 1930, the U.S. had
    7,000 hospitals
Hill-Burton
   The Hill-Burton Program, enacted in 1946,
    provided federal dollars for communities
    to build hospitals around the country.
   The program represented the federal
    government’s first substantial contribution
    to the health-care system.
   The goal was to establish a hospital in
    every community in the U.S.
The Cost of Health Care
   With the growing number of hospitals and
    the increasingly sohisticated medical
    precedures, came and increase in the cost
    of health care.
   At the same time, the ability of patients to
    pay was declining—particularly during the
    Great Depression.
Paying for Health Care
   Hospital administrators ere concerned
    about how to support their new facilities.
   Pre-pay agreements began in the 1920’s
    and allowed hospitals to enter agreements
    with employers if they paid a set fee for
    every employee in advance.
   Hospitals, employers, and consumers were
    unhappy with this model.
The Birth of the Blues
   The American Hospital Association entered
    into talks with state regulators to create a
    new kind of insurance plan based on third-
    party payers.
   The regulators insisted that the plans be
    non-profit.
   Blue Cross and Blue Shield were born.
Government Encourages the Third-
         Party System
   The U.S. retained its limited government
    philosophy.
   However, insurers, providers, and employers all
    accepted help from the government.
   Govt. made health insurance tax deductible.
   Health insurance was exempt from the wage
    freeze during WW II.
Commercial Insurance
   Commercial companies wanted to share the
    success of BC/BS.
   Targeted healthy people.
   Charged lower premiums that BC/BS.
   The government encouraged the competition.
   As a result there was a tremendous growth in
    employer-sponsored private insurance.
   In 1988, more than 140 million Americans had
    private health insurance.
The New Deal
   Roosevelt sought to use the government
    to save the economy and provide health
    care.
   He wanted national health insurance, but
    the AMA was opposed.
   Roosevelt compromised and created a
    welfare system that includes a social-
    insurance wing and a welfare wing.
Hospital Insurance for the Aged
   Truman proposed national health
    insurance, but lost.
   The American view has been that health
    care is not a right; it is a benefit
    purchasable by those who can afford it.
   Truman proposed hospital insurance for
    the aged and lost.
Medicare and Medicaid
   LBJ won the presidential election in a
    landslide and had a democratic majority in
    Congress.
   For the first time since FDR, the Congress
    had the ability, the votes, and the power
    to enact comprehensive health legislation.
   Johnson decided to propose health
    insurance for the aged.
As a result of a compromise:
   Johnson’s proposal for hospital insurance
    was enacted as Medicare Part A.
   The Republican proposal for physician
    insurance for the aged became Medicare
    Part B.
   The AMA proposal to expand welfare-
    medicine became Medicaid.
Community Health Centers
   The program, enacted in 1965, established
    community centers that were clinic-based and
    oriented toward primary and preventive care.
   The model sought to allow local groups to
    develop their own kinds of health care
    programs.
   These centers were initially funded by the
    federal government and later by Medicaid.
Medicaid
   Enacted in 1965
   Funded jointly by federal and state
    governments.
   In 200, Medicaid provided health
    insurance to 40 million low-income
    Americans at a cost of approx. $200 billion
    a year.
Roots of Managed Care
   Prepaid health care existed in the 19th
    century, but most providers opposed it.
   Uncomfortable with prepayment.
   Providers who took prepayment risked
    bearing some of the expenses associated
    with treating consumers who have high
    costs.21
Problems with the Traditional
             System
By the 1960s and 1970s, there were 3 major
  problems with the traditional system:

-rising costs
-variations in care
-uncoordinated care
The Rise of Managed Care
   Capitated prepaid system—the incentive is
    to provide less care instead of more.
   By directly hiring physicians, prepaid plans
    can reduce physician autonomy—create
    practice guidelines.
   Instituted gatekeeper systems.
Problems with Managed Care
   Patients may lose ability to choose any
    doctor.
   Physicians resisted loss of autonomy.
   Changed fiscal incentives.
The Government and Managed
                Care
   Congress passed the HMO Act of 1973
    which set aside federal money to help
    spur the growth of HMOs around the
    country and required large employers to
    offer their employees and HMO option.
   This was an attempt to deal with the
    health care crisis.
The Crisis Continues
   Americans were not ready for HMOs in
    1973.
   By the mid-1980s, large employers started
    to complain that they were spending too
    much money on health care and started
    looking at managed care for a solution.
IRA’s and PPO’s
   HMOs were unpopular because consumers
    couldn’t choose their doctors.
   IRAs (independent practice associations) gave
    patients ability to choose from an approved list
    of MDs and see them in their own offices.
   POSs allowed consumers to see a doctor outside
    of the approved list for a higher fee.
Managed Care Grows
   During the 1990’s, managed care
    experienced phenomenal growth.
   Managed-care plans became looser in an
    attempt to satisfy consumer demands for
    choice and physician demands for
    autonomy.
   Rising costs are again creating a crisis for
    managed care.
Legislating Managed Care
   Bind between pleasing consumers and
    managing costs.
   Patient protection laws.
   Employers choose to self-insure to avoid
    legislation.
Suing HMOs
   80%-85% of Americans belong to health plan
    that prohibits them from bringing to state court
    a claim for wrongful denial of coverage.
   Most people have to bring the claim to federal
    court where the awards would be smaller.
   Pres. Bush wants to limit awards to $500,000
    total.
   Advocates argue that the threat of litigation
    creates accountability.
Questions for Debate
Is health care a right?
Should the U.S. have national health
  insurance?
Should there be caps on medical malpractice
  awards?
Does managed care work?
What is the responsibility of Americans for
  limiting health care costs?
The evolution of the health care system

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The evolution of the health care system

  • 1. The Evolution of the Health Care System Robin Cleeland, Ph.D., LCSW
  • 2. English Poor Law Tradition  Bias against federal and state action in regard to social welfare.  Adopted English poor law tradition.  Only local gov’t has the authority, right, and obligation to provide benefits.  Benefits are provided to the “deserving poor.”
  • 3. Local Government Initiatives  Local governments did engage in some public health initiatives in the 18th, 19th and early 20th centuries.  Built public hospitals and public health clinics.  Created health codes  Minimal in nature and directed toward the aged, disabled and deserving poor.
  • 4. Health Care w/o Government  Most people received health care at home.  Traditional healers.  Midwives.  Faith healers.  Herbalists.  Doctors existed but were not like today.
  • 5. The Rise of Physicians and Hospitals  State became involved in regulating the sale of potions, herbs, and medicines.  Physicians were recognized by state regulators as “providers of choice.”  From late 1800’s to early 1900’s, hospitals took a central role.
  • 6. Hospitals  Prior to the late 1800’s, the nation had few hospitals.  Hospitals that existed in U.S. were usually run by local counties or charitable organizations.  Hospitals almost exclusively served the poor, indigent, aged, and disabled.  Poor conditions for poor people.
  • 7. Factors that Changed Hospitals  The technology of medicine changed.  The nursing profession changed.  The U.S. became more urban and industrialized.  Hospitals developed new means of treating people.  Medical education changed. (Flexner)
  • 8. Changes in Hospitals  As a result of all of these factors, there was a dramatic rise in the number of hospitals during the 20th century.  In 1873, the U.S. had approximately 178 hospitals. By 1900, the number had reached 4,000. By 1930, the U.S. had 7,000 hospitals
  • 9. Hill-Burton  The Hill-Burton Program, enacted in 1946, provided federal dollars for communities to build hospitals around the country.  The program represented the federal government’s first substantial contribution to the health-care system.  The goal was to establish a hospital in every community in the U.S.
  • 10. The Cost of Health Care  With the growing number of hospitals and the increasingly sohisticated medical precedures, came and increase in the cost of health care.  At the same time, the ability of patients to pay was declining—particularly during the Great Depression.
  • 11. Paying for Health Care  Hospital administrators ere concerned about how to support their new facilities.  Pre-pay agreements began in the 1920’s and allowed hospitals to enter agreements with employers if they paid a set fee for every employee in advance.  Hospitals, employers, and consumers were unhappy with this model.
  • 12. The Birth of the Blues  The American Hospital Association entered into talks with state regulators to create a new kind of insurance plan based on third- party payers.  The regulators insisted that the plans be non-profit.  Blue Cross and Blue Shield were born.
  • 13. Government Encourages the Third- Party System  The U.S. retained its limited government philosophy.  However, insurers, providers, and employers all accepted help from the government.  Govt. made health insurance tax deductible.  Health insurance was exempt from the wage freeze during WW II.
  • 14. Commercial Insurance  Commercial companies wanted to share the success of BC/BS.  Targeted healthy people.  Charged lower premiums that BC/BS.  The government encouraged the competition.  As a result there was a tremendous growth in employer-sponsored private insurance.  In 1988, more than 140 million Americans had private health insurance.
  • 15. The New Deal  Roosevelt sought to use the government to save the economy and provide health care.  He wanted national health insurance, but the AMA was opposed.  Roosevelt compromised and created a welfare system that includes a social- insurance wing and a welfare wing.
  • 16. Hospital Insurance for the Aged  Truman proposed national health insurance, but lost.  The American view has been that health care is not a right; it is a benefit purchasable by those who can afford it.  Truman proposed hospital insurance for the aged and lost.
  • 17. Medicare and Medicaid  LBJ won the presidential election in a landslide and had a democratic majority in Congress.  For the first time since FDR, the Congress had the ability, the votes, and the power to enact comprehensive health legislation.  Johnson decided to propose health insurance for the aged.
  • 18. As a result of a compromise:  Johnson’s proposal for hospital insurance was enacted as Medicare Part A.  The Republican proposal for physician insurance for the aged became Medicare Part B.  The AMA proposal to expand welfare- medicine became Medicaid.
  • 19. Community Health Centers  The program, enacted in 1965, established community centers that were clinic-based and oriented toward primary and preventive care.  The model sought to allow local groups to develop their own kinds of health care programs.  These centers were initially funded by the federal government and later by Medicaid.
  • 20. Medicaid  Enacted in 1965  Funded jointly by federal and state governments.  In 200, Medicaid provided health insurance to 40 million low-income Americans at a cost of approx. $200 billion a year.
  • 21. Roots of Managed Care  Prepaid health care existed in the 19th century, but most providers opposed it.  Uncomfortable with prepayment.  Providers who took prepayment risked bearing some of the expenses associated with treating consumers who have high costs.21
  • 22. Problems with the Traditional System By the 1960s and 1970s, there were 3 major problems with the traditional system: -rising costs -variations in care -uncoordinated care
  • 23. The Rise of Managed Care  Capitated prepaid system—the incentive is to provide less care instead of more.  By directly hiring physicians, prepaid plans can reduce physician autonomy—create practice guidelines.  Instituted gatekeeper systems.
  • 24. Problems with Managed Care  Patients may lose ability to choose any doctor.  Physicians resisted loss of autonomy.  Changed fiscal incentives.
  • 25. The Government and Managed Care  Congress passed the HMO Act of 1973 which set aside federal money to help spur the growth of HMOs around the country and required large employers to offer their employees and HMO option.  This was an attempt to deal with the health care crisis.
  • 26. The Crisis Continues  Americans were not ready for HMOs in 1973.  By the mid-1980s, large employers started to complain that they were spending too much money on health care and started looking at managed care for a solution.
  • 27. IRA’s and PPO’s  HMOs were unpopular because consumers couldn’t choose their doctors.  IRAs (independent practice associations) gave patients ability to choose from an approved list of MDs and see them in their own offices.  POSs allowed consumers to see a doctor outside of the approved list for a higher fee.
  • 28. Managed Care Grows  During the 1990’s, managed care experienced phenomenal growth.  Managed-care plans became looser in an attempt to satisfy consumer demands for choice and physician demands for autonomy.  Rising costs are again creating a crisis for managed care.
  • 29. Legislating Managed Care  Bind between pleasing consumers and managing costs.  Patient protection laws.  Employers choose to self-insure to avoid legislation.
  • 30. Suing HMOs  80%-85% of Americans belong to health plan that prohibits them from bringing to state court a claim for wrongful denial of coverage.  Most people have to bring the claim to federal court where the awards would be smaller.  Pres. Bush wants to limit awards to $500,000 total.  Advocates argue that the threat of litigation creates accountability.
  • 31. Questions for Debate Is health care a right? Should the U.S. have national health insurance? Should there be caps on medical malpractice awards? Does managed care work? What is the responsibility of Americans for limiting health care costs?