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October 21, 2009 > Healthcare- A stormy debate

Healthcare- A stormy debate

A TCV series by William Marshak

The fifth article of this series focuses on the growth of health insurance coverage and its impact on the American economy.

In a confused, uneven and rapidly shifting landscape, costs and breadth of healthcare has changed dramatically. Treatments have advanced, but along with modern "miracles," specialization, cost and access have suffered. In a system that strengthened in the 1950s, private insurers emerged as a dominant force for those who could afford the expense while the poor were relegated to welfare services. National health care expenditures were 4.5 percent of the Gross National Product.

Advances in medication including the dramatic arrival of a Polio vaccine heralded an acceleration of viable healthcare treatments. Successful organ transplants became possible. The cost of hospital care doubled and those without coverage through employment were often left behind. President Lyndon Johnson signed Medicare and Medicaid into law in the 1960s; the bulk of physicians reported themselves as "specialists." Healthcare costs soared.

The high cost of medical care gave birth to new forms of pre-payment in the 1970s. Health maintenance organizations (HMOs) formed with federal endorsement and certification. Calls for a national health insurance by President Nixon were rebuffed by labor unions which used medical insurance as a bargaining tool. Medical advances continued at a rapid pace; smallpox declared eradicated by the World Health Organization.

Corporations began to make their presence known in hospital systems and healthcare becomes centralized under large organizations in the 1980s. To moderate increased costs, Medicare shifts its payments to a Diagnosis-Related Group (DRG) system for payment. Private insurers follow declaring "fee for service" too expensive and sometimes fraudulent. Use of "capitation" fees in which physicians are paid a monthly or annual fee for patient care regardless of the number or nature of services provided, becomes more common.

As the country approached the millennium, healthcare progress accelerated and so did costs. While "managed care" plans helped moderate costs, insurance reforms were unable to gain any traction. By the end of the 1990s, 16 percent of the nation had no health insurance. The 2000s led to renewed emphasis on reform and general agreement that employer-based systems and Medicare were unsustainable. Frenzied debate has erupted over use of government-related plans. Private medical insurance has become untenable for many individuals and businesses. The result is unclear at this time but the mood favoring change is unmistakable.

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