Have you ever wondered why healthcare is so complicated and so expensive to administer? It hasn’t always been that complicated. Looking back and studying how healthcare delivery has evolved in the United States, it does seem inevitable that we would ultimately end up where we are right now– with a complex and super EXPEN$IVE system.
This six-part series will look at the history of the US healthcare system and provide you perspectives to assist with adapting and adjusting to the rising costs, particularly as it relates to patient responsibility.
Looking back over time, healthcare in the United States hasn’t been considered a right of the people or the responsibility of society or the government to provide. From its origin, healthcare professionals were treated no differently than butchers, bakers, or masons. If you wanted a cut of meat, a loaf of bread, or a brick fireplace, you were expected to pay for these goods and services. There was no difference in this thought process when it came to healthcare. Healthcare is a service consumers are expected to pay and that concept remains the same today.
What caused the greatest change in healthcare compared to other professions was a drive to standardize this industry and separate the science of medicine from mysticism. Unlike meat, bread, and bricks, which are physical goods, treatments are not tangible.
Starting in the 1800’s, standards for acceptable medical practices began to form. In 1848, a group of 12 physicians in Charlottesville, Virginia, published what became the first physician fee schedule. Private homes were the normal place of service. The cost to see a physician was $1.00. If the doctor had to travel over 2 miles, the visit would cost you $2.00. If you needed your leg amputated, that would cost you $20.00.
The average cost of medical services has risen on average 5% each year since 1960. What has not differed between today and 1848 is the cost of healthcare has always been expensive for most people. By 1900, the average amount an individual paid for healthcare was $5.00 per year, which equates to roughly $155 today.
The establishment of standardized fees and the relative expense of healthcare services created the foundation of our insurance marketplace. In 1929, an insurance plan was created to support Dallas schoolteachers. Premiums were set at $0.50 per month. Known as the “Baylor Plan”, this was the first pre-paid insurance plan in modern times.
By the 1960s, a general push was mounting to provide medical insurance for the poor and elderly in the United States. This led to the 1965 enactment of the Medicare and Medicaid programs. It is important to note that healthcare plans like the “Baylor Plan”, Medicare, and Medicaid, were not created to PROVIDE healthcare for the American people. They were created as a means to help the American people PAY for healthcare services.
Although standardized and regulated, healthcare was still treated no differently than purchasing meat, bread, or bricks. It is a service that the consumer would be expected to pay. In the case of Medicare and Medicaid, fees are collected from the consumer through taxes.
The US government’s current level of healthcare spending makes it the single largest expense in the world.
Part 2 – The Rise of Patient Costs