On Health Insurance, Part 4

8 Jun

And now an article for which I will actually have to cite some sources, though many of them will be Wikipedia anyway:
A Brief History of US Health Insurance

Health Insurance has only been a thing for like ninety years or so. There were types of disability and accident insurance before that, but none that were really focused on paying your medical bills. And why would you need to? When your medical services consist of a) the local doctor who never went to school for this, but watched over the shoulder of the previous town doctor for a few years, b) the local apothecary who went out and picked some useful herbs and ground them up for your use, or c) the snake oil vendor who just swept through town, your medical bills aren’t really going to be that high. The snake oil jerk is ripping you off, yes, but all three of those men just need to feed their families, really. They don’t have loans to pay off or insurances to keep up themselves, so they’re not charging you arms and/or legs.

The problem, really, was the twentieth century, or maybe the tail end of the nineteenth. That’s when doctors and science got together and said, hey, maybe we could, I dunno, figure out how to actually fix stuff instead of just plopping leeches on people. Their marriage gave birth to schools of medicine, modern hospitals, tests and treatments. Which is great! But the downside is that all this stuff costs money. Your diploma’d doctors and clean, state-of-the-art hospitals need patients on tables and in beds in order to get paid so they can pay off all their bills, and if you’re only getting the desperately ill in there, that’s not really a steady stream. And why would someone who’s not desperately ill risk a bill that would take them decades to pay off?

So in 1929, this dude at Baylor University Hospital had an idea. He noticed that people will end up spending significant amounts on things that can be nickeled and dimed out of them, like cosmetics, but end up spending less on healthcare because it’s a big chunk. So he thought, hey, let’s break that down for them. So Baylor University Hospital went to a local teacher’s union for a pilot program: The teachers paid 50 cents a month (which, in 1929, was actual money) and in return, they could walk into the hospital and get whatever healthcare they needed. And it was a good deal all around: the hospital got a steady stream of income, and the teachers got steady health care.

1929 may be a year that you remember from history class. Maybe something about October? A Black Friday that does not refer to the day after Thanksgiving? Yeah. The Great Depression really made this whole little health insurance concept catch on across the country, because suddenly no one wanted a huge honking hospital bill. So as hospitals across the country started taking a page from Baylor’s book, the newborn health insurance got a name: Blue Cross.

Yeah, that one.

World War II had a big hand in making things the way they are today, too. During the war, not only goods but wages were rationed; some industries were under government-imposed wage freezes, while at the same time requiring increased production and shipping a big chunk of the workforce overseas. So how did factories attract workers? Side benefits such as–you guessed it–healthcare insurance. Suddenly it’s a profitable thing, which meant that commercial insurance companies were getting into the act, so healthcare insurance just explodes in popularity.

Like with most good things, the government didn’t pick up on it until late in the game. Medicare was legislated into existence in 1965 after having first been proposed by President Harry S. Truman in 1945. The reimbursement schedule was originally kind of loose; they’d pay sort of randomly based on what the doctors billed them, and the doctors could then demand that the patient pay whatever the government didn’t. Things didn’t get organized until almost 20 years later.

Remember the CPT codes I talked about last time? The AMA created those in 1966. Originally they had nothing to do with getting paid; they were just a way to standardize terminology for recording purposes and so doctors knew what the hell other doctors were talking about. The government created the HCPCS coding in 1978 to do pretty much the same thing as well as allow for procedures the AMA hadn’t dealt with yet, and then in 1983, Congress smushed them together and said “okay, physicians, we’ll pay you based on these codes for Medicare part B.” Part A–the hospital coverage–also got a new reimbursement system then: the hospital gets a lump sum based on the patient’s diagnosis, regardless of how much or how little it actually costs them to treat the patient. The private healthcare market pretty much followed suit, and that’s, roughly, how we got the billing system we have today.

Information credits:
You shouldn’t be surprised this spawned from an NPR story. I also mentioned Wikipedia, and sure enough, I used two articles from there. The internet also granted me this ten year old article about CPT coding, this historical overview of insurance, and this article that gave me a bit more Medicare insight.

Next time: I get to use that Politics and Religion category, woot.

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