Robin Cleeland, Ph.D., LCSW

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?