However as care got more costly Medicare and Medicaid were born in the 1960s to cover segments of the population no insurer wanted to touch. Medicare enrolled 90% of seniors in its first year.
The price of staying well continued on its upward spiral. Medical science improved and seemed to move from a maybe to a more solid definitely in terms of assuring health. So under the Nixon administration in the 1970s HMO legislation passed. It provided seed money to insurers to set up a program of preventive care and office visit payments. It was built on the Kaiser model. The hope: bring down expenses. A framework of providing preventive care and urging people to see their PCP was created. The PCP was to be a gatekeeper for any specialty.
All was fine for a year or two, but then contracts to entice employers led to much deal cutting and an imbalance as to who paid what. To keep market share and attract revenue various services were offered that were redundant and distant from any rational planning. In the meantime hospital care was expensive but the number of hospitals had increased (Thanks to the Hill Burton Act). It could not be sustained and a number of hospital closures ensued in the 1980s and 1990s. With the closings of hospitals, each survivor felt they were fighting for their life.
Adding to these fears was the Balanced Budget Act of 1997. No longer did Medicare pay 130% of cost (but cost) and hospital discounts to insurers ceased.
Elaborate departments were created to negotiate and scour the countryside for new revenue. From 1970 to 2009 the numbers of doctors grew by 200%. Health industry administration during the same period grew a whopping 3000%(From presentation by Steffie Woolhandler MD).
The risk pools were chopped up into various underwriting groups. For those in an unfavorable group the premiums became so costly they went without. Others went on the “government dole.” Medicaid, Disability, the VA, or Medicare.
Negotiations were and are carried out in quasi secret (others eventually find out) and pit one group against another. It was not a better mouse trap but strategies by savvy business types who were up for this ruthless game. Unfortunately the ones who pay the bill had to pay the piper. The paper work and rules to sustain this system are estimated to cost an extra $400 billion a year. Rube Goldberg would have been proud.
Any solutions have to answer these questions: How do we get to a risk pool of proper size so cost for the same services is even and kept individually affordable? How do we get transparency on pricing? What is basic coverage? What should the rules be that assures affordability? How do we stem the medical inflation rate without disrupting valued customs of care? How do we develop an efficient regional care program? Submit your answers please.
Dr. Don Green