US Healthcare: A Short History

How did Healthcare come about in the United States? The simple answer is costs keep up with care.

As the nation went to war in the early 1940’s, many able bodied men went overseas and competition for workers begin to increase. In order to lure new employees, American companies had to resort to new tactics.

One of which was offering health insurance as part of a more attractive benefits package.

That became the basis for today’s system where costs are spread across a large group of people, and the healthy help pay for the sick. In the 1940’s the growing strength of the Unions gave workers more bargaining power, and a tax-free employer-sponsored health program became a common concession.

In the 1950’s, healthcare became even more sophisticated as a host of new medicines became available including antibiotics to fight infection. Unfortunately, the cost of treatment continued to rise and those without employer-based healthcare had to pay cash or not see a doctor at all.

By the dawn of the 1960’s, companies across the nation began to offer health insurance in response to the rising costs of medicine, treatment and new or more sophisticated procedures. Also during this time Medicare and Medicaid were implemented allowing the elderly and poor some government sponsored protection from rising costs.

During the 80’s and 90’s, health costs rose rapidly.

As a result, most employer sponsored health plans change from the more expensive pay-as-needed plan to a plan that allowed third parties to set up fee structures and manage cost. By the mid-90’s, the most common type of health plan was managed care.

Today, managed care is still fairly common in US healthcare especially as a PPO plan, though it is losing popularity as more consumer driven plans are introduced. Health insurance is still typically available through your employer who negotiates coverage for the whole group of employees to lower costs.

If you’re self-employed or unemployed you typically have three options.

  1. Take a big financial risk and go without medical coverage.
  2. Pay full price for every medical procedure at rates that haven’t been pre-negotiated.
  3. Or purchase your health insurance on the open market.

Health coverage came about as healthcare became more sophisticated and expensive. And you typically get it through your employer on the private market or through the government in the form of Medicare and Medicaid.

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