Adam Davidson and Alex Blumberg: Accidents Of History Created U.S. Health System
[Adam Davidson has reported on international business and economics for NPR's National Desk since December 2004. Alex Blumberg is a contributing editor for NPR's Planet Money. He is also a producer for the public radio program This American Life, and an adjunct professor of journalism at Columbia University.]
If you want to understand how to fix today's health insurance system, you'd be smart to look first at how it was born. How did Americans end up with a system in which employers pay for our health insurance? After all, they don't pay for our groceries or our gas.
It turns out there never was any central logic at work. The evolution of the American health care system began in the 1920s, when choices boiled down to which crazy cure you preferred...
... In that era, most medical care in the U.S. was basically medieval — a bunch of potions that did nothing. 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 Health Insurance
Before the birth of modern medicine, hospitals were poorhouses where the indigent went to die. Then came the advent of effective medicines, especially antibiotics, along with a revolution in medical schools.
Suddenly, says economic historian Melissa Thomasson,"hospitals are marketing themselves as places to have babies." The professor at the Miami University in Ohio says that in the early part of the 20th century, hospitals were able to focus on happy outcomes...
... An official at Baylor University Hospital in Dallas noticed that Americans, on average, were spending more on cosmetics than on medical care."We spend a dollar or so at a time for cosmetics and do not notice the high cost," he said."The ribbon-counter clerk can pay 50 cents, 75 cents or $1 a month, yet it would take about 20 years to set aside [money for] a large hospital bill."
The Baylor hospital started looking for a way to get regular folks in Dallas to pay for health care the same way they paid for lipstick — a tiny bit each month. Hospital officials started small, offering a deal to a group of public school teachers in Dallas. They offered a plan for the teachers to pay 50 cents each month in exchange for Baylor picking up the tab on hospital visits.
When the Great Depression hit, almost every hospital in the country saw its patient load disappear. The Baylor idea became hugely popular. It eventually got a name: Blue Cross...
Read entire article at NPR
If you want to understand how to fix today's health insurance system, you'd be smart to look first at how it was born. How did Americans end up with a system in which employers pay for our health insurance? After all, they don't pay for our groceries or our gas.
It turns out there never was any central logic at work. The evolution of the American health care system began in the 1920s, when choices boiled down to which crazy cure you preferred...
... In that era, most medical care in the U.S. was basically medieval — a bunch of potions that did nothing. 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 Health Insurance
Before the birth of modern medicine, hospitals were poorhouses where the indigent went to die. Then came the advent of effective medicines, especially antibiotics, along with a revolution in medical schools.
Suddenly, says economic historian Melissa Thomasson,"hospitals are marketing themselves as places to have babies." The professor at the Miami University in Ohio says that in the early part of the 20th century, hospitals were able to focus on happy outcomes...
... An official at Baylor University Hospital in Dallas noticed that Americans, on average, were spending more on cosmetics than on medical care."We spend a dollar or so at a time for cosmetics and do not notice the high cost," he said."The ribbon-counter clerk can pay 50 cents, 75 cents or $1 a month, yet it would take about 20 years to set aside [money for] a large hospital bill."
The Baylor hospital started looking for a way to get regular folks in Dallas to pay for health care the same way they paid for lipstick — a tiny bit each month. Hospital officials started small, offering a deal to a group of public school teachers in Dallas. They offered a plan for the teachers to pay 50 cents each month in exchange for Baylor picking up the tab on hospital visits.
When the Great Depression hit, almost every hospital in the country saw its patient load disappear. The Baylor idea became hugely popular. It eventually got a name: Blue Cross...