Accidents Of History Created U.S. Health System : NPR

If you want to understand how to fix today’s health insurance system, you’d be wise to first look at how it was born. How did Americans end up with a system where employers pay for our health insurance? after all, they don’t pay for our purchases or our gasoline.

Turns out there was never any core logic at work. The evolution of the American health care system began in the 1920s, when the choices came down to which crazy cure you preferred.

Reading: How did health insurance start

dr. John Brinkley, for example, was a big hit on American radio with his health advice shows. For whatever problem people had, Brinkley had a fabulous solution: transplant a goat’s gland into your body. he presented it as perfect for everything from insanity to impotence to flatulence. But if somehow a goat’s gland doesn’t cure your ailments, you can always use bonnore’s electromagnetic bath liquid or clark stanley’s snake oil liniment.

At that time, most of the health care in the us. uu. it was basically medieval: a bunch of potions that didn’t do anything. luckily, though, they were cheap potions. health care was a trivial part of the average person’s annual budget. In 1900, the average American spent $5 a year on health care ($100 in today’s money). no one had health insurance, because you don’t need insurance for something that costs $5 a year.

the first medical insurance

Before the birth of modern medicine, hospitals were asylums where the homeless went to die. then came the advent of effective drugs, especially antibiotics, along with a revolution in medical schools.

See also: How long to pass a nicotine test for life insurance

Suddenly, says economic historian Melissa Thomasson, “hospitals are marketing themselves as places to have babies.” The professor at the University of Miami in Ohio says that in the early 20th century, hospitals could focus on happy outcomes.

medical care became much more effective and much more expensive. clean hospitals, educated doctors, and real drug research cost money. people showed a willingness to pay for care when they were really sick, but it was still not common to go for checkups or survival illnesses.

In the late 1920s, hospitals noticed that most of their beds were empty every night. they wanted people who were not seriously ill to start coming.

an official at baylor university hospital in dallas noted that americans, on average, spent more on cosmetics than health care. “We spend a dollar or so at a time on cosmetics and don’t notice the high cost,” he said. “The tape counter clerk may pay 50 cents, 75 cents or $1 a month, yet it would take him about 20 years to set aside [money for] a large hospital bill.”

baylor hospital began looking for a way to get ordinary people in dallas to pay for medical care the same way they paid for lipstick: a small amount each month. Hospital officials started small, offering a deal to a group of public school teachers in Dallas. They offered a plan for teachers to pay 50 cents each month in exchange for Baylor taking care of hospital visits.

When the Great Depression hit, almost every hospital in the country saw its patient load disappear. Baylor’s idea became very popular. finally got a name: blue cross.

“When I really started looking into these things, I was interested because I wondered why we have an employer-based system,” says Thomasson. “it comes directly from the blue cross”. The genius of that approach, he says, was marketing it to groups of workers.

See also: What does a no-fault state mean for auto insurance? |

the modern system is born

Soon, blue cross coverage was available in almost every state, though not many people bought it. The modern system of making a profit through a job required another catalyst: World War II. Thomasson says that if the Great Depression inadvertently inspired the spread of employer-based health insurance, World War II accidentally spread the idea everywhere.

“The war economy is a completely different ball game,” says Thomasson. the government rationed goods even as factories ramped up production and needed to attract workers. factory owners needed a way to attract employees. she explains that owners turned to fringe benefits, offering increasingly generous health plans.

The next big step in the evolution of medical care was also an accident. In 1943, the Internal Revenue Service ruled that employer-paid health care should be tax-free. a second law, in 1954, made tax advantages even more attractive.

thomasson cites the huge impact of those measures on participation in the plan. “You start from 9 percent of the population in 1940 to 63 percent in 1953,” she says. “Everyone is starting to participate. It’s just growing by leaps and bounds. In the 1960s, 70% [of the population] was covered by some form of private, voluntary health insurance plan.”

Therefore, employer-based insurance, which began with the sale of blue cross coverage to Texas teachers and spread due to government price controls and tax breaks, became our system. In the mid-1960s, Thomasson says, Americans began to see that system, in which people with good jobs get health care through work and just about everyone else looks to the government, as if it were the natural order of life. things.

but for thomasson and other economic historians, there is nothing natural or inevitable about it. instead, they see it as the profound result of historical accidents.

See also: What is out of pocket limit for health insurance