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- 1. Historic Events Impacting the Evolution of Healthcare in America aka “Why does my healthcare cost so much?” Hollie Sturgeon, PharmD
- 2. Outline Progressive Era American Association for Labor Legislation’s proposal 01 Great Depression Health insurance, a New Deal & Social Security 02 World War II Recovery Fringe benefits, President Truman, & the 1953 tax exemption 03 Three Layer Cake Establishment of Medicare & Medicade – and their unintended results 04 The Uninsured and the Under-insured Narrowing the gap in health insurance coverage 05 Universal Insurance Coverage Massachusetts, Obamacare & the Trump administration 06
- 3. 01: The Progressive Era In 1915, after successfully campaigning for worker’s compensation insurance, the American Association for Labor Legislation proposed an insurance for low income workers and their dependents. (Oberlander, 2012; Star, 2013)
- 4. 02: The Great Depression Private Health Insurance 1929: Dr J. F. Kimball at Baylor University Hospital created the first hospital insurance program. This became the first of the Blue Cross Insurance Plans (Reagan, 1999) Social Security 1934: President Roosevelt established the Committee on Economic Security with a mandate to develop social insurance proposals to include unemployment, old-age insurance, and health insurance. (Starr, 2013)
- 5. 03: America After World War II Fringe Benefits 1943: Post war wage caps prevented unions from bargaining for increased pay – but fringe benefits, such as insurance, were allowed under the controls. (Reagan, 1999) President Truman 1945: Truman sent a message to Congress, making him the first president to openly propose a national healthcare program. (Reagan, 1999; Starr, 2013) Tax Exemptions 1953: The Eisenhower administration created a blanket tax exemption for all employer contributions to health insurance policies, and broadened medical expense deductions. (Starr, 2013)
- 6. 04: Repercussions of a “Three Layered Cake” 1965 1973 Medicare & Medicaid Medicare Part A (mandatory, hospital costs) Medicare Part B (voluntary, physician costs) Medicaid (federal money paid to states for healthcare programs for the poor, elderly & disabled) (DeParle, 2000) HMO Act 1974 Social Security defined HMOs as a single organization providing a comprehensive range of health care services for a fixed, paid in advance, periodic payment as an alternative to existing fee-for-service medical care (Meuller, 1974) Hospital Cost Containment Bill Proposed decrease in capital spending, and a cap on revenue, rather than wages, to allow hospitals to make adjustments in the areas they deemed most appropriate. (Francis, 1977) Prospective Payment A payment strategy based on specified criteria to predetermine payment for a health care service. Helps reduce billing abuses and allows Medicare to more accurately predict future spending. (Shi & Singh, 2019) 1977 1983 publicdomainimageamericanheritagechocolate-unspash.com
- 7. 05: The Uninsured and the Under-insured ● 1972: Medicare expanded ● 1974: Kennedy National Health Insurance Proposal ● 1985: Consolidated Omnibus Budget Reconciliation Act (COBRA) ● 1986: Emergency Medical Treatment and Active Labor Act (EMTALA) ● 1990: Omnibus Budget Reconciliation Act (OBRA) ● 1993: Clinton Healthcare Plan ● 1996: Health Insurance Portability and Accountability Act (HIPAA) ● 1997: State Children’s Health Insurance Program (SCHIP) ● 2003: Medicare Modernization Act (MMA) licensedimagewolterke-stock.adobe.com (DeParle, 2000; Oberlander, 2012; Reagan, 1999; Starr, 2013)
- 8. 06: Universal Insurance Coverage 2006: State legislature approved a universal healthcare plan. The number of uninsured persons in the state remains above 94% since 2008. (Center for Health Information and Analysis (CHIA), 2020) 2010: Patient Protection and Affordable Care Act (ACA) enacted, and in 2012, the US Supreme Court ruled it to be constitutional, but federal government cannot withhold funding from states choosing not to expand Medicaid programs. (Oberlander, 2012) 2017: Signed an Executive Order to repeal and replace the ACA with the American Health Care Act (AHCA). As of May 2020, the AHCA has yet to fully pass through congress. (Congressional Research Service, 2017) Massachusetts ObamaCare Trump Administration Icons: Massachusetts by Alexander Skowalsky from the Noun Project insurance by ayu from the Noun Project Donald Trump by Lorie Shaull from the Noun Project
- 9. Center for Health Information and Analysis. (2020, April). Massachusetts Health Insurance Survey. CHIA. https://www.chiamass.gov/massachusetts-health-insurance-survey Congressional Research Service. (2017, May 4). H.R. 1628 (115th): American health care act of 2017. Govtrack. https://www.govtrack.us/congress/bills/115/hr1628/summary#libraryofcongress DeParle, N. M., (2000). Celebrating 35 years of medicare and medicaid. Health Care Financing Review, 22(1), 1-7. https://www.cms.gov/Research-Statistics-Data-and-Systems/Research/HealthCareFinancingReview/downloads/00fallpg1.pdf Francis, S., (1977). Hospital cost containment (H.R. 6575 - S.1391). The Heritage Foundation, 9, 1-6. https://www.heritage.org/medicaid/report/hospital-cost-containment-hr-6575-s1391 Lee, N. S. (2015). Framing choice: The origins and impact of consumer rhetoric in US health care debates doi:https://doi- org.une.idm.oclc.org/10.1016/j.socscimed.2015.06.007 Mueller, M. S., (1974). Health maintenance organization act. Social Security Bulletin, 37(3), 35-39. https://www.ssa.gov/policy/docs/ssb/v37n3/v37n3p35.pdf Oberlander, J. (2012). Unfinished journey — A century of health care reform in the united states. The New England Journal of Medicine, 367(7), 585-590. doi:http://dx.doi.org.une.idm.oclc.org/10.1056/NEJMp1202111 Reagan, M. D. (1999). The Accidental System: Health Care Policy in America (Dilemmas in American Politics). Westview Press Incorporated. Shi, L., & Singh, D. (2019). Delivering health care in america : A systems approach (7th ed.) Jones & Bartlett Learning. http://www.r2library.com/resource/title/9781284124491 Starr, P. (2013). Remedy and reaction : The peculiar american struggle over health care reform. New Haven: Yale University Press. References
- 10. CREDITS: This presentation template was created by Slidesgo, including icons by Flaticon, and infographics & images by Freepik. Images Please keep this slide for attribution. american heritage chocolate (n.d.). [Photograph of person piping white chocolate onto a chocoate cake]. Unsplash. https://unsplash.com/photos/5K5Nc3AGF1w ayu. (n.d.). Insurance. [Public domain vector graphic]. The Noun Project. https://thenounproject.com/search/?q=insurance&i=1623743 felipecaparros. (n.d.). Stethoscope on an old book of medicine, conceptual image. [Licensed photographic image]. Adobe Stock. https://stock.adobe.com/Library/102b3c46-cd93-47b6-bafc-310a28e71c6d?asset_id=234263025 [picture of progressive party bull moose campaign button]. (n.d.). https://commons.wikimedia.org/wiki/File:Theodore_Roosevelt_1912_Progressive_Party_bull_moose_campaign_button.jpg Shaull, L. (n.d.) Donald Trump. [Public domain vector graphic]. The Noun Project. https://thenounproject.com/term/donald-trump/680918/ Skowalsky, A. (n.d.). Massachusetts. [Public domain vector graphic]. The Noun Project. https://thenounproject.com/search/?q=massachusetts&i=1012857 wolterke. (n.d.). Blue Cross Blue Shield Exterior and Logo [Licensed photographic image]. Adobe Stock. https://stock.adobe.com/Library/102b3c46-cd93-47b6-bafc-310a28e71c6d?asset_id=281460561
Editor's Notes
- The reformers of the Progressive Era exemplified the ideals of civic engagement, working to make their society a safer place to live. During the early 1900’s, in an effort to improve working conditions, they proposed a program to support factory workers through periods of illness. Later, between 1935 and 1950 they expanded their aims to include a national health insurance program to benefit everyone. (Starr, 2013) At first the American Medical Association (AMA) supported the idea. However, a group of medical specialists convinced the association that the government would force physicians to compete with each other in a way that would drive down physician income. Additionally, the “industrial insurance” agencies felt threatened by the proposal. Between the two special interest groups they had enough clout to delay and ultimately defeat the campaign. (Starr, 2013)
- In 1929, just before the stock market crash heralding the Great Depression, Dr. Justin Kimball (the administrator of Baylor University Hospital in Dallas, TX) established a hospital stay insurance plan costing 50 cents per month. This plan became the first insurance plan offered by private insurer Blue Cross. By 1950 there were roughly 95 million Blue Cross subscribers. (Reagan, 1999) As part of Roosevelt’s New Deal, the Committee on Economic Security was commissioned to draw up proposals for social insurance. Old-age insurance, unemployment, and health insurance fell under their purview. The predominant view of the committee members was that the AMA would once again oppose health care reforms. (Starr, 2013) Rather than chance the loss of unemployment and old-age support if the bill did not pass, the Social Security Act of 1935 contained only minor provisions in regards to health care (Reagan, 1999; Starr, 2013)
- As a measure to prevent post war inflation, wage controls were enacted. Denied the ability to bargain for increased pay, unions began to bargain for increased fringe benefits – such as health insurance – as these were permissible under the enacted controls (Reagan, 1999) In November of 1945, President Truman sent a message to Congress asking for national healthcare. (Reagan, 1999; Starr, 2013) The AMA’s rhetoric in opposing the initiative took advantage of the Cold War climate, calling it “socialized medicine,” un-American, and implying that anyone in support of national healthcare was a closet communist. (Lee, 2015; Star, 2013). This misconception continues on in current debate. An IRS ruling in 1953 made contributions to an individual health insurance policy taxable, even though contributions to a group policy were exempt. To address the apparent inconsistency, the Eisenhower administration created a blanket tax exemption for all employer contributions to health insurance policies, and additionally broadened medical expense deductions. (Star, 2013) .
- In 1965, The Johnson administration proposed a mandatory plan to cover elderly hospital costs. This was opposed by the Republicans due to its mandatory nature, and by the AMA as it did not cover physician payments. (DeParle, 2000; Reagan, 1999) House Ways and Means Committee Chairman Wilbur Mills began a process of negotiating and promise-making resulting in a combination of the two. The initial hospital plan became Medicare Part A. Medicare Part B is a voluntary plan that pays physician costs – including hospital-based specialists like anesthesiologists, radiologists and pathologists. (Starr, 2013) Mills expanded existing federal funding to states for programs to care for their poor and disabled persons. This became Medicaid. The three parts together were dubbed a “3 layer cake.” (DeParle, 2000; Starr, 2013) Medicare was worded such that the Federal Government could not set hospital or physician pricing. Rather, they established themselves as a payer utilizing the established fee-for-service method. Hospitals and physicians quickly realized that by increasing costs across the board, they would be paid more by both Medicare/Medicaid, and private insurance. Moral opposition to “socialized medicine” quickly evaporated in light of the new profitability. (Starr, 2013). Between 1965 and 1970, state and federal spending for healthcare increased by 20.8% each year. The rate of growth in medical costs overall more than doubled in that time. The average cost per day to stay in a hospital in 1950 was approximately $15. By 1976 the cost was estimated to be $176. The media, followed by the public, started calling for action to resolve the “crisis in healthcare.” (Francis, 1977; Starr, 2013) Health Maintenance Organizations (HMOs) were developed as a method of managing dollars more effectively. (Meuller, 1974; Reagan, 1999) And in 1977, President Carter proposed the Hospital Cost Containment Act in an attempt to decrease unnecessary purchasing of expensive, rarely used technology and slow the rapid growth of hospital revenue. (Francis, 1977) Neither approach proved to be an effective solution. (Oberlander, 2012; Starr, 2013) 1983 saw the biggest change in Medicare spending. The federal government stopped retrospectively paying hospitals and physicians whatever their stated cost of a completed procedure or patient stay. As a part of the Social Security Amendments, a predetermined payment amount is paid for specified procedures. Hospitals or physicians adopting more efficient strategies for providing patient care would profit more than those employing wasteful methods. (Shi & Singh, 2019; Starr, 2013)
- The acknowledgement of a “Healthcare Crisis” brought attention to more than just the rising costs of healthcare. It also highlighted the existing inequalities of coverage. A call for more, and better, methods of addressing these concerns resulted in a series of legislative measures. In 1972, Medicare was expanded to cover two groups under the age of 65 - person who had qualified for Social Security disability insurance for two years, and persons with a need for kidney dialysis due to end-state renal disease. (DeParle, 2000; Oberlander, 2012; Starr, 2013 Edward “Ted” Kennedy proposed a national health insurance proposal in 1974 that, while defeated, served as a template for President Clinton’s Healthcare Plan in 1993. While Clinton’s plan failed to pass, it set the stage for the Obama administration’s success in 2010. (Starr, 2013) In 1985, Congress passed the Consolidated Omnibus Budget Reconciliation Act (COBRA), which let persons who lost employer health insurance due to a loss of employment continue their insurance coverage for up to 18 months, provided the worker paid the full premium themselves. (Oberlander, 2012; Starr, 2013) The Emergency Medical Treatment and Active Labor Act (EMTALA) was enacted the following year. EMTALA made it mandatory for all hospitals to assess and stabilize any patient seeking emergency care without regard to their ability to pay. (Oberlander, 2012; Starr, 2013) The 1990 Omnibus Budget Reconciliation Act (OBRA) mandates Medicaid coverage for children ages 6 to 18 years old living in homes with incomes below the poverty level. (Oberlander, 2012) The Health Insurance Portability and Accountability Act (HIPAA) of 1996 reduced an employer’s ability to exclude insurance coverage of pre-existing conditions for new employees. (Oberlander, 2012) The State Children’s Health Insurance Program (SCHIP) – now known as Children’s Health Insurance Program (CHIP), was established in 1997 to provide coverage for children whose families could not afford private health insurance, but did not qualify for Medicaid. (DeParle, 2000; Oberlander, 2012) In 2003 Medicare added prescription drug coverage with the Medicare Modernization Act (MMA). Additionally, it instituted Health Savings Accounts that could be paired with high-deductible insurance plans. (Oberlander, 2012)
- In 2006 the Massachusetts State Legislature passed a universal healthcare plan proposed by Governor Mitt Romney. By 2008 the number of insured persons in the state was at an estimated 94%. The latest assessment by the Center for Health Information and Analysis (CHIA) published in April of 2020 showed that those numbers are still accurate almost 12 years later.(CHIA, 2020; Oberlander, 2012; Starr 2013) The 2010 Patient Protection and Affordable Care Act (ACA) was roughly modeled on the Massachusetts plan, but has not garnered the same results. In 2012, the US Supreme Court, while ruling that the ACA was constitutional, denied the federal government’s ability to withhold funding to states that opted against expanding their Medicaid programs. (Oberlander, 2012; Starr 2013) Upon taking office in 2017, President Trump signed an Executive Order to repeal and replace the ACA. The bill intended to replace the ACA, The American Health Care Act (AHCA) is still in legislation as of May 2020. (Congressional Research Service, 2017) With the current pandemic causing a rise in unemployment, and the resulting loss in healthcare coverage, it may have a large impact on whether the AHCA is ratified as is. .