THE HAPHAZARD WAY AMERICA ADOPTED AN INSURANCE-BASED HEALTHCARE SYSTEM MAY SURPRISE YOU.
Julio Gonzalez, M.D., J.D.
Presently, the United States has an insurance-based healthcare system. The coverage is certainly not uniform throughout the population, but nevertheless, whether it's a government-supplied insurance or private, funding for America's healthcare system funnels to insurance. But is an insurance-based system really the best solution for our nation's healthcare challenges? Did we really implement insurance coverage for Americans? To get the answer to that question we would have to look at how we developed a healthcare-based insurance system in the first place.
During World War II, with its colossal dependence on young men to prosecute the war against the Axis Powers, American workers were in high demand. Salaries were increasing, and with them, the threat of runaway inflation. To keep these trends in check, Congress passed the Stabilization Act of 1942 giving the President the authority to freeze wages and salaries.[i] Within a day of its passage, President Roosevelt froze workers' salaries.
As with any external manipulation of market forces, employers found themselves having to devise new and innovative ways to attract employees since they could no longer do so through salaries alone. Many turned to health insurance benefits. Of course, paying for one's health insurance did not equate to a pay raise, but it did provide a benefit for which the employee no longer had to pay. Predictably, the number of insured Americans rose from a mere 9.8% in 1940 to nearly 30% six years later,[ii]and by the 1960s, 80% of Americans had some form of health insurance.[iii]
The transition being made, Americans were essentially made dependent on insurance for the funding of their healthcare. But there were problems with the system. First, not only did Americans become dependent on insurers for funding, they had unknowingly become dependent on the insurers' policies regarding the rendering of certain treatments. If the insurer did not agree with a certain treatment, the beneficiary was not going to receive it. Slowly but surely, in transitioning to an insurance-based healthcare system, Americans had given away a portion of their healthcare autonomy.
As a result, the consumer was in a position to ask for a compendium of services, even if those services were not quite necessary. In the meantime, the provider, who was paid by the number of services he or she provided, was motivated only to provide more services. After all, the consumer was no linger serving as the natural check upon the provider's spending practices like one would see in the open market. As a result, America went from spending what it could reasonably afford on healthcare to becoming the highest spending country in the world on healthcare at 17.9% of its gross domestic product.
The Progressive response was to regulate more, even when the real answer was present before them all the time. Their approach was to regulate more. Thus they enacted laws designed to have government set what prices ought to be for services and under what circumstances. Laws, some of them quite voluminous, such as ERISA, Obamacare, and the multiple renditions of the Medicare Budget Act represent attempts by government to control the price of healthcare through regulation despite the fact that such measures rarely work. Instead the system became bogged down with the overwhelming weight of bureaucratic oversight and intervention while the percent of GDP devoted to healthcare remained the highest in the world.
In our next incarnation of thefederalistpages,com's healthcare series, we will share with you the first and most elemental step in restoring some form of fiscal responsibility to our healthcare delivery system, and it requires minimal government interference. In the meantime, it takes a great deal of effort to fight these deeply entrenched bureaucratic taints in our healthcare, which is what the Center for Healthcare Policy Solutions aims to do.
Could you please help by contributing $20, $50, $100, or more to help us fight this battle? Any amount is greatly appreciated. And all assistance is welcomed.
Please visit healthcarepolicysolutions.com to learn more and contribute.
Dr. Julio Gonzalez is an orthopaedic surgeon and lawyer living in Venice, Florida. He served in the Florida House of Representatives. He is the author of numerous books including The Federalist Pages, The Case for Free Market Healthcare, and Coronalessons. He is available for appearances and book signings, and can be reached through www.thefederalistpages.com.
[i]Stephen Mihm, "How U.S. Health Care Was Built by a Series of Accidents," Bloombergblog), Feb. 24, 2017, accessed May 27, 2019, https://www.bloomberg.com/opinion/articles/2017-02-24/how-u-s-health-care-was-built-by-a-series-of-accidents.
[ii]Stephen Mihm, "How U.S. Health Care Was Built by a Series of Accidents," Bloombergblog), Feb. 24, 2017, accessed May 27, 2019, https://www.bloomberg.com/opinion/articles/2017-02-24/how-u-s-health-care-was-built-by-a-series-of-accidents.
[iii]Stephen Mihm, "How U.S. Health Care Was Built by a Series of Accidents," Bloombergblog), Feb. 24, 2017, accessed May 27, 2019, https://www.bloomberg.com/opinion/articles/2017-02-24/how-u-s-health-care-was-built-by-a-series-of-accidents.