The History of Healthcare Finance
The History of Healthcare Finance – Write a 2000 word essay addressing each of the following points/questions. Support your ideas with at least three (3) scholarly citations in your essay. Use strict APA 7 guidelines to format the paper. Please include a conclusion and reference page.
Healthcare finance has change drastically since 1950. Please discuss the changes that have occurred and the effect on healthcare delivery with each change.
Sample Answer
The History of Healthcare Finance
The approaches utilized in funding personal health care services play a vital role in shaping a country’s healthcare system. Personal medical care comprises services like physician care, hospital services, drugs prescribed to people, and dental care. Also, healthcare funding approaches influences how individuals access healthcare, the forms of health care they offer to people, and the instruments utilized to distribute health care services. Besides, financing approaches applied in a healthcare system influence how healthcare costs are dispersed among the society members by earnings and even by health condition (Griffin, 2020). The health care financing methods used across developed countries vary widely. For instance, the US applies unique approaches to fund its healthcare system compared to those utilized in various developed nations. In the U.S., there are a wide range of third-party payers, including Medicaid and Medicare, health insurance entities, and employer-sponsored health plans, and for-profit or not-for-profit provider-based insurance companies (Griffin, 2020). A significant percentage of the employed individuals and their dependents are enrolled under the employer-sponsored health plans. Besides, this country has various federal initiatives that offer health insurance for low-income individuals, the disabled, and the elderly. They include the Medicare and Medicaid program and the State Child’s Health Insurance Programs (SCHIP) (Griffin, 2020). The U.S. healthcare financing system has changed drastically since 1950. This paper discusses the history of healthcare finance and the significant changes that have occurred, and their effects on healthcare delivery.
The Progressive Era
The progressive era emerged as the 19th century melded into the 20th century. During this period, nothing much had been discovered in healthcare finance in the U.S. However, significant efforts were made outside the government to support health insurance. For instance, the American Association of Labor Legislation (AALL) advocated for health insurance (Griffin, 2020). It established a bill that advocated for the provision of health insurance to the working-class and those whose annual income was less than $1200, as well as their dependents (Griffin, 2020). It was to cover the services of physicians, nurses, and hospitals. It also included sick pay, death benefit, and maternity benefits. The costs were to be paid by the state, employers, and workers. This bill was supported by the American Medical Association (AMA), but many states medical societies rejected it because of how the physicians were to be compensated. As a result, the proposed compulsory health insurance plan got denounced by the president of the American Federation of Labor (AFL) (Griffin, 2020).
Healthcare in 1930s-1940s
The country experienced an increase in hospital costs during this period. Its healthcare costs increased from 7.6 per cent to 13 per cent between 1918 and 1930 (Papanicolas et al., 2018). In the 1930s, various healthcare organizations, such as the Ross-Loos Medical Group, a physician-sponsored organization, began to offer prepaid comprehensive health care to its employees and dependents. Also, Blue-cross plans were established to end competition among hospitals as they started to operate their prepaid health plans and compete with each other. This program offered the community rating insurance premiums, where the beneficiaries paid an equal amount of premiums regardless of sex, age, or preexisting condition. Besides, private insurance companies entered the market in the 1930s. Unlike the Blue cross plans, the private insurance companies established premiums based on the level of risk. Thus, the riskiest potential customers were avoided. Later, the Blues also embraced this type of premiums to compete with the private insurance companies in the market. In 1935, the Social Security Act became law. This legislation required the federal government to share with the states the healthcare costs incurred in providing care to the aged, the blind, and families with dependent children and the disabled. It also allowed the medical expenses to be included in the individuals’ monthly assistance payments.
In 1941, the number of Americans covered for hospitalization by private health insurance increased to 12.4 per cent from 6 per cent in 1939 (Gaffney et al., 2020). The largest population was under the BlueCross-Blue Shield policy. About 51 per cent of the US residents were under this program. Besides, 33 per cent had enrolled in a group or individual policies from insurance companies (Gaffney et al., 2020). At the same time, about 14 percent were under health insurance plans offered by community groups, individual practice plans, and private group clinics (Gaffney et al., 2020). Despite the significant development of the Blue Cross, Blue Shield plans, and commercial health insurance, various efforts to introduce national health insurance were observed in the 1940s. For instance, the Wagner bill of 1939, has been modified to a national health insurance and reintroduced into Congress in 1945, 1947, and 1949, but still failed to get signed into law by the president (Waxman, 2018).
Healthcare in 1950s-1960s
Significant developments were made in the U.S. healthcare financing system in1950s. For example, Congress passed multiple amendments in the Social Security Act of 1935. This act advocated for the provision of monthly assistance payments to reduce the cost of medical care incurred by individuals. However, the rates of these payments were too small to cater for various basic needs such as food and shelter. Thus, one of the amendments made on this policy inclusion of vendor payments. These were the direct payments made by the state to physicians, nurses, and healthcare institutions, instead of welfare recipients (Waxman, 2018). Besides, in 1952, the Truman administration started advocating for medical care for the aged, which later was called the Medicare program (Habel, 2020). Thus, various efforts were made to implement the Medicare program. For instance, in 1957, Congressman Aime Forand introduced a bill in the House which advocated for covering hospital costs for the aged on social security, but the bill failed to pass. Instead, a substitute law called Kerr-Mills was introduced and passed into law in September 1960. The program covered only the medically needy, individuals who were not eligible for welfare but still unable to afford medical care, and the aged (Catlin & Cowan, 2017). However, the program differed from the Medicare program in that it was state-based, it was entirely an option of the state, and it was a kind of a welfare benefit for those individuals who had financial problems. Several states supported this program, and therefore, thirty-nine states had established the program for the aged by November 1964, which covered hospital services, prescription drugs, physician visits, and nursing home care (Habel, 2020). Also, the Medicare program was approved and became law in 1965. It was expected to support the medical needs of the older adults aged 65 years and older (Catlin & Cowan, 2017).
