Week 8 Discussion
Disclaimer: It is impossible to discuss the history of U.S. health care without long discussions about health insurance. Our free market health care system is underpinned by health insurance. So, let’s get the discussion started…
In the early twentieth century [1900s to 1920s], commercial insurance companies enjoyed enormous success selling “industrial” life insurance policies to working-class families. The lump-sum payments provided by these policies generally paid for funerals and the expenses of a final illness. This business was the backbone of two companies, Metropolitan Life and Prudential, that had risen to the top of the insurance industry by collecting 10, 15, and 25 cents a week from millions of American working-class households. But because the premiums were paid on a weekly basis and lapses were frequent, these polices had to be marketed by an army of insurance agents, who visited their clients as soon after a payday as possible. The administrative costs of industrial insurance were staggering; subscribers received in benefits only about 40 percent of what they paid in premiums. The rest went to the agents and companies (Direct excerpt from Starr, 1982, p. 242, para. 3).
Meanwhile in Europe, social insurance was established to protect the individual “against the costs of sickness” and was becoming pervasive. Social insurance provided financial protection from sickness, industrial accidents, disability, old age, and unemployment (adapted from Starr, 1982, p. 238)
The Great Depression caused Americans to re-think the benefits of “social insurance.” There was a great debate. On the one hand, some folks were against social insurance because it seemed like socialized medicine; they stuck to their classical liberalism views. On the other hand, social insurance was working in Europe and directly benefited those in society that needed it the most (the elderly, the unemployed, single mothers and their children). The Great Depression caused many Americans to support a federal retirement system with benefits that extended to those marginalized in society-it was a great compromise.
The Social Security Act of 1935 was as close to universal health care as stubborn Americans would allow. Although the Great Depression was our “focusing event” that could have ushered in sweeping transformation for the health care system, we clung to our classical liberalism, capitalism, and health care on the free market system. Unlike the United Kingdom where their focusing event (World War II) caused them to embrace government run health care; their economy was destroyed by years of war-it seemed the right thing to do at the time. Some would argue that England’s National Health Service (as it is know today) is a successful model that provides health care to all its citizens.
Moving forward, private health insurance had to do something, it had to evolve. Private health insurance can be broken down into three general types of medical benefit plans (adapted from Starr, 1982, p. 291):
- Indemnity benefits plan
- The subscriber pays a premium to the insurance company
- After using health care, the subscriber pays the medical provider and submits a claim for reimbursement to the insurance company
- The insurance company reimburses the subscriber for medical expenses that are approved/outlined in the insurance policy
- Often, the insurance company does not reimburse the whole claim for reimbursement
- All transactions are between the subscriber and the insurance company (health care has already been paid)
- Service benefits plan
- The subscriber pays a premium to the insurance company
- After using health care, the medical provider bills the insurance company
- Often, the insurance company reimburses the whole bill (usually because of negotiated rate/fee set forth in a contract)
- All transactions are between the medical provider and the insurance company (the subscriber just pays the insurance premiums)
- Direct services plan
- The subscriber pre-pays for medical services, usually a medical provider
- The subscriber receives health care by the organization that is taking the pre-payment-there is no other billing for services
- All transactions are between the medical provider (receiving the pre-payments) and the subscriber
Review the provided website and read the Discussion Board question carefully. Answer the question. Then respond to one (1) classmate’s posting.
Review the new California Health Care Mandate at the State of California Franchise Tax Board website (be sure to explore the links to get a better idea of what this really means): https://www.ftb.ca.gov/about-ftb/newsroom/news-articles/health-care-mandate.html (Links to an external site.)
Discussion Board question:
Why did Governor Newsom, through an executive order, mandate that all Californians have health insurance? And is it fair to those that advocate for less government interference in their lives?
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