Medical care in the US considerably
higher than in other countries; the question that arises often is why? The
answer lies in health finances. Health insurance was a payment system designed
to facilitate medical reimbursement. However with the rise in costs and demands
for greater coverage, health insurance became its own special, complex monetary
beast. Companies initiated more measures to prevent insurance abuse and run
away expenses. They also began to discriminate certain groups based on health
factors and possible future liability. These problems of health insurance demonstrate
the necessity of compulsory healthcare.
The
rise of modern science propelled the increase in medical cost to newfound
heights. New diagnostic medical inventions such as x-rays and CAT scans were complex
and expensive equipment. New specialized preparation methods for surgery
focused on asepsis and antisepsis. New staff organizations could adequately care
for a battery of different fatal illnesses. The hospital was central to the
increase of public access to these latest scientific developments.[1] However
at the same time the patients were gaining greater access to the fruits of
science, they found themselves unable to pay for hospital services. Drastic treatment
for patients with acute problems such as appendectomy is expensive upfront and
needs to be paid off like credit debt.[2] Those
without the wherewithal to pay often found themselves buried in hospital bills.
Knowing the expense, some patients refused to pay for services.[3] The
inability of hospitals to be reimbursed for their services placed considerable
pressure on them to develop payment plans.
With
escalating medical expenses, health insurance became vital to paying off
medical costs. The first systems of health insurance were referred to as “hospital
prepayment plans.”[4] The
American Hospital Association (AHA) envisioned these plans in 1929 as “the
principle of insurance against the costs of hospital care.”[5] The
popularity of the plans paved way for the development of Blue Cross, an
insurance for hospital charges. However, Blue Cross covered only hospital bills
not doctors’ fees, which led to patient complaints. The solution was another
prepayment plan for doctor fees called Blue Shield. Both of these prepayment
plans would eventually become private insurance associations. In 1982, the two
separate groups, Blue Cross and Blue Shield, combined to form the Blue Cross
Blue Shield Association.[6]
However, Blue Cross and Blue Shield faced growing competition from other commercial
insurance companies who lowering their premiums using “cost sharing” methods.
As
the years progressed insurance companies were faced with a financial dilemma. Technological
innovations of scientific research continued to raise treatment costs. This
trend, in combination with a call for greater coverage, strained finances. The
original financial plan was for the monthly premiums to cover medical expenses.
However, insurance coverage was reaching a larger population. This provided both
the benefit of a larger pool of premiums to draw on and the detriment of
covering the treatment for a larger pool of patients. The rise in costs was
outpacing the growth in revenue. Onto the scene came major medical insurance
with cost sharing.[7]
Cost sharing balanced out price with more coverage. The basic idea behind cost
sharing was to increase the patients’ stake in their own treatment. This out of
pocket payment was to prevent patients from overusing health services. Out of
this principle came the deductible and copayment. The deductible was “a
specific amount of money the insured must pay out of pocket before coverage
kicks in.”[8]
This idea was intended to prevent patients from being able to immediately use
health insurance after purchase. The copayment was “a fixed fee that patients
covered by health insurance must pay themselves for a given medical service,
usually at the time the service is given.”[9] This
concept was to prevent patients from abusing health services after their
coverage kicks in.
The
cost sharing measures were often implemented with other insurance measures
design to keep expenses low. One method was to discriminate health insurance
coverage and premiums based on prior health conditions. This practice fell
under the purview of what was classified as “experience rating,” varying
insurance plans according to “the particular health conditions and experience
of the individual or group.”[10] Another
method of keeping costs down under the experience rating was racial and gender
discrimination. There were assumptions of women as the weaker gender and more
prone to health hazards. Blacks were also statistically shown to suffer from
diseases at a higher rate than Whites, a health disparity that continues to
affect them to this day. Added to the experience rating was the practice of
rescission, canceling insurance coverage.[11] This
was practiced often for individual insurance holders especially when they hit
the age of 65. The result was that a considerably portion of the elderly were
left without health insurance coverage.
Current
US healthcare predicaments involve the same issues that remain unresolved. As
new technologies continue to fascinate the American public, the costs continue
to climb making the politics around healthcare as one of cost rather than
coverage. The recent Patient Protection and Affordable Care Act (PPACA) under
the Obama administration has eliminated some of insurance companies cost
cutting measures such as excluding patients with preexisting health conditions,
but left in place deductibles and copayments. With the new coverage for those
with preexisting health conditions the general overall health insurance
premiums are expected to rise and/or the deductibles and copayments for new
patients are expected to increase. However, the compulsory status of health
insurance is a first step towards keeping health expenses down. With more
healthy people getting insurance we can hope for benefits in the long run.
[1] William Bynum, The History of Medicine: A Very Short
Introduction (Oxford: Oxford University Press, 2008), 124-126.
[2] Philip M. Boffey, “The
Money Traps in US Health Care,” New York
Times, Jan. 22, 2012.
[3] Beatrix Hoffman, Health Care for Some: Rights and Rationing in
the United States since 1930 (Chicago: University of Chicago Press, 2012), 33-34.
[4] Ibid., 34.
[5] Ibid.
[6] Blue Cross Blue Shield Association. "An Industry Pioneer." Blue
Cross Blue Shield. Accessed November 21, 2016.
https://www.bcbs.com/about-us/industry-pioneer.
[7] Beatrix Hoffman,
"Restraining the Health Care Consumer: The History of Deductibles and
Co-Payments in U. S. Health Insurance," Social Science History 30,
no. 4 (2006): 504.
[8] Hoffman, Health Care for Some, 105.
[9] Ibid., 266.
[10] Ibid.
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