November 07, 2011
Over the course of the past 50 years, health care benefits costs and coverage have become a dominant force in almost everyone's life. By 1990, 186 million Americans were covered by health insurance (Kinner & Pellegrini, 2009). Even with that extremely high number, many people are still left out not possessing any insurance coverage because either they can’t afford it or they just don’t have it. With health care expenditures reaching an all-time high, the public people are left wondering where is all the money going. This has been a question that has raised many concerns, unanswered questions, and a re-look at how health care evolved.
In the early 20th century health insurance was seen as a way for the people to prepay for their medical needs. During this period, Americans were having trouble being able to pay for their healthcare. Physicians would make pay arrangements for the patients who could not afford care. Unfortunately, during this time, the hospitals were not able to make such arrangements. Between 1929 and 1930, average hospital receipts plummeted from more than $200 per patient to less than $60 (Wasley, 1993). With this dramatic drop in revenue, insurance plans were the only way for the hospitals to guarantee their cash flow.
In 1929, Baylor University Hospital devised a plan that permitted teachers to pay a monthly fee that would cover the cost of any medical care they may need. Once other hospitals heard of what Baylor was doing, they too created insurance plans that allowed for patients to have a physician of their choice. At this point, medical insurance had changed the entire health care system by making sure that the hospitals remained in business and their incomes were secured. It was at this point when the foundation was made for the Healthcare insurance market.
In 1965, a reimbursement procedure called Cost-plus caused a devastating hit to health care cost....