A Brief History Of Our Health Insurance System

A Brief History Of Our Health Insurance System

As America’s health insurance system stumbles forward toward the abyss of Trumpcare… it is important that people understand how we got to this point in America.  

People seem to always talk generally about “healthcare”… when we are really talking about how to pay for it.  And Trumpcare is actually not so much a “healthcare system” as it is a tax break for the wealthy with the top 1% earners gaining a $350 billion dollar tax break over the next ten years.  This is because there was an Obamacare tax on those making over $200,000 a year ($250K for couples) that paid for the subsidies that made the system work. 

Obamacare actually seems to be working far better in states with Democratic governors who embraced the Medicaid expansion and supported the system with well-run exchanges.  I live in New York State and have had a great experience with Obamacare for two years now. When I joined, my monthly insurance premiums went down, my co-payments remained the same, as did all of my doctors.  And I had a preexisting heart condition. I was with Blue Cross before in the private market and I am still on Blue Cross through Obamacare, with much better coverage.  Previously it had been difficult to find affordable insurance and the policy I found was expensive.  But worse was the fact that the coverage was poor.  I had a heart procedure in the final year of that policy and even though I had insurance I had to pay over $20,000 “out of pocket” in that one year alone.  And yes… my monthly premium payment for Obamacare/Blue Cross went up by seventy-five dollars this year.  But it is still well worth it as under Obamacare my maximum annual “out of pocket” caps at $5,500.  So I would have saved around $15,000 had I been on Obamacare in the year that I had my heart procedure. Obamacare also has no maximum lifetime “cap”… so I won’t go bankrupt if I develop a major medical condition. Which was happening to thousands of Americans before Obamacare. 

Fortunately I am legally contracted to my Obamacare plan through the end of the year and turn 65 in November, when I will move to Medicare.  I feel like I’m stepping off the stern of the Titanic as the ship goes down around me! 

When Republicans point out exploding premiums it is usually in “red” states like Arizona that only have one provider offering coverage.  Whereas in New York I had a choice of several competing plans, making my premium more manageable.   As in any business… when there is competition, prices come down. 

But those living in Republican run states (whose governments ran away from Obamacare) have frequently not done well under the system usually due to the lack of participating insurance companies.  

Embracing the continuing Republican plan to redistribute more wealth to the top, Trumpcare takes away the mandate of Obamacare. Republicans have also long claimed that the mandate was unconstitutional, even though it held up in court.  And without the mandate individual coverage collapses and we could end up with a system where only people with health problems sign up for insurance. The larger the pool of participants, the more the costs for people with health issues get absorbed by the population. 

And about that “unconstitutional” mandate…

The first mandate to purchase health insurance actually came from President John Adams in 1798… when he signed a bill mandating that all merchant seaman purchase health insurance.  It was an occupation with high hazards and the rest of the citizenry covered the cost of treatment.  Adams felt that they should take responsibility for their own care.  Sound familiar?  

But I suppose this one shouldn’t count…  because after all…  what did John Adams know about the Constitution? 

In 1929… A group of schoolteachers in Dallas Texas banded together to form an alliance to buy “hospital time” at Baylor University Hospital for their group.  This was the firstmodern “employer based” healthcare plan.

In 1935… FDR pushed for universal healthcare to ease the suffering during the depression… but he gave up the fight in favor of going for Social Security instead.  

In 1942… with the country entering WWII…FDR froze wages across the board for all public and private employees.  The military was drafting most of the men and FDR knew that wages could skyrocket as employers out-bid each other for the available workers.  

So employers all began offering health benefits as a hiring incentive to get around the wage restrictions. 

And PRESTO!  We got an “employer based” healthcare system!

 

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Meanwhile over in Europe… with the counties and their economies devastated by WW2… governments stepped in directly to handle healthcare.  And “universal healthcare” was born. 

In the United Kingdom their  “National Health” became quite popular and easily survived the budget cutting ravages of Margaret Thatcher in the 1980s. These “single payer” systems exist in every major first world industrialized country today, and many second and third worlds have successfully adopted the system as well. The United States, is the only first world country in the world without universal healthcare, and in some cases we pay twice as much for care due to the middle level of profitability inhabited by the insurance companies as well as a lack of regulations for drug pricing that exist in other countries.   

Back in the United States, in 1965… LBJ (certainly our most politically powerful president since FDR)… was able to “strong-arm” congress into passing Medicare.  Which has been a major success ever since. 

And what did they say about Medicare at the time?

RONALD REAGAN (1965): "Write those letters now; call your friends and write to them. If you don't, this program I promise you, will pass just as surely as the sun will come up tomorrow... And if you don't do this and if I don't do it, one of these days we are going to spend our sunset years telling our children and our children's children, what it once was like in America when men were free."

And by the time Reagan got to the White House fifteen years later, the plight of the uninsured had gotten so bad that people were regularly turned away by emergency rooms if they could not prove that they were insured.  People were actually dying… and there was a much-publicized case of a woman named Sharon Ford in Oakland California losing her baby even though she had insurance.  Unfortunately she had forgotten to bring her insurance card with her to the emergency room (for more information click here). 

So Congress passed, and Reagan signed, a bi-partisan law called the Emergency Medical Treatment and Active Labor Act in 1986 that required all hospital emergency rooms to admit and “stabilize” anyone showing up at their doors before asking how payment would be made.  

Which is how we got a system of people without insurance going to the emergency room for anything that ailed them.  And when people can’t play, which is often, the government… and then all of us… end up picking up the tab though our taxes.  The law had great intentions, but it set us up for a situation where emergency rooms were greatly overused, and healthcare suffered due to overcrowding of the facilities. 

So the man that warned us that Medicare was “socialized medicine” signed legislation that essentially turned the uninsured over to the government for their healthcare needs in very expensive emergency rooms.  

The even greater irony is that by requiring Americans to be insured through the mandate… Obamacare actually attempted to “privatize” Reagan’s “public” emergency care system! 

And with Trumpcare we will be returning to a system where society’s most vulnerable will be going back to emergency rooms for their care as the plan calls for 11 million Americans to be dropped off of Medicaid… while the 1% make $350 billion off the deal.  Obviously not the best system for our country. 

My own rather simple solution would be to keep Obamacare but add a “public option” (Medicare that the public pays for just as they would the private insurance companies). This would add important competition for the private insurance companies in states that have fewer than three competing private health insurance companies.   The Medicare system is already in place.  Why not use it as a government run insurance company to give the private companies much needed competition?  

Gilbert Hetherwick      
Hetherwick@me.com
www.GHGAZETTE.com

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