TAILIEUCHUNG - THE HISTORY OF HEALTH CARE COSTS AND HEALTH INSURANCE

Every opinion poll shows Wisconsin citizens are worried about the cost of health care. It is affecting the security of every family and the bottom line of every business. We have come to expect soaring health care costs each year and we feel almost help- less to do anything about it. How did it get this way? That is the question we asked Linda Gorman, . to research for us. As the Director of the Health Care Policy Center for the Independence Institute, Dr. Gorman is well qualified to answer the question. Her report points out critical flaws in the American health care system that date back to the. | Wisconsin Policy Research Institute Report October 2006 Volume 19 Number 10 THE HISTORY OF HEALTH CARE COSTS AND HEALTH INSURANCE A Wisconsin Primer REPORT FROM THE SENIOR FELLOW Every opinion poll shows Wisconsin citizens are worried about the cost of health care. It is affecting the security of every family and the bottom line of every business. We have come to expect soaring health care costs each year and we feel almost helpless to do anything about it. How did it get this way That is the question we asked Linda Gorman . to research for us. As the Director of the Health Care Policy Center for the Independence Institute Dr. Gorman is well qualified to answer the question. Her report points out critical flaws in the American health care system that date back to the Great Depression. It was during the Depression that hospitals banded together to offer prepaid coverage to citizens. Prepaid hospital coverage was a way for hospitals to avoid the financial failure that befell the banking industry. The approach worked so well that doctors followed suit a few years later and Blue Cross Blue Shield organizations were born. Little did anyone know that the seeds for runaway costs eighty years later had been planted. Prepaid employer-provided insurance quickly dominated the health care landscape. Subsequent action by the federal government in the 1950s to provide a tax deduction for health insurance premiums helped solidify the approach. To set the system in concrete in the 1960s the federal government created Medicare and Medicaid two programs patterned closely after the Blue Cross model. While the resulting American health care model proved a clever way to ensure that the money would roll in from patients employers and government it contained a flaw that is proving fatal. The flaw is that health care consumers have been removed from participating in decisions regarding their care. Our approach to health insurance ignores the important role consumers play in .

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