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History of medical insurance: past, present and future (Lesson 2)

Medical insurance and Medicaid solve the loopholes in commercial insurance

With commercial (and non-profit) medical insurance companies now fully integrated into the employment culture and practice of the United States, a new problem has emerged. How about the health care of the elderly Americans who have retired from their employers? This is not entirely about retirement.

In the early stage of health insurance, everyone pays the same premium, regardless of their risk level as individuals: this method is called “community rating” With the intensification of competition among insurance companies, insurance companies realize that they can provide better premiums for people with lower risks. Young, healthy and less likely to be injured: for example, teachers. For example, you don’t need to have a degree in statistical computing science to conclude that the health risks faced by teachers are far lower than those faced by coal miners.

As organized trade unions become more and more popular, insurance companies can sign contracts with ideal professional trade unions by providing “experience based rates” Finally, the market pressure forces all insurance companies to move in this direction, otherwise they will face the loss of all customers except the customers with the greatest risk. This is not a successful insurance company! When insurance companies shift from community rating to experience rating to a large extent, Therefore, the premium is lower for those who are less likely to make a claim (similarly, teachers are a fairly safe choice), and higher for those who are more likely to make a claim (that is, the elderly).

Although experience-based rating is very effective for insurance companies and people of working age, it is obviously not good for the elderly, retirees and the disabled. The most vulnerable paid the highest premium. That is why in 1965, President Lyndon B. Johnson signed the Medical Insurance Act, making it a law.

Interesting fact: Part of the reason why medical insurance is so complex and has so many different parts is to appease the interests of different groups. Each group has interests. If you remember, AHA (the organization that supported the original Blue Cross insurance plan, which brought stable income to hospitals during the Great Depression) supported the later part A of medical insurance: hospital insurance. In addition, AMA (on behalf of doctors who do not support universal insurance) has become part B of medical insurance: voluntary outpatient doctor insurance.

The third layer of the health insurance “cake” (not joking) is to expand federal funds to help the elderly and low-income disabled states. In this way, Medicaid was born. Although Medicaid was signed into law by President Johnson in 1965 as a part of the health insurance law, the states must actually decide how to use the money, so the application of Medicaid (which is still the case today) is not uniform in the interstate flow.

For more information about Medicare, please refer to our Medicare 101 content to understand the status of Medicare Advantage. Find comments on the role of digital transformation in health insurance, or update best practices for managing the manufacturing workforce before and after the health insurance open registration season.

The rise of managed care: HMO, PPO and POS programs

In the history of medical insurance, the old has become the new. As the cost of health care continues to rise – due to advances in medical technology and other factors – insurance companies seek to control these costs.

Learning from some early health insurance plans, they decided to manage care by creating a network of service providers. Moreover, just like the first health insurance plan of the Dallas school system to “prepay” teacher care (but only if they receive this service at Baylor University Hospital!), Insurance companies began to establish specific hospitals, and their members could go to and obtain service insurance.

HMO plan

The Health Maintenance Organization (HMO) is the most limited version of managed care. Although there are several different types of HMOs, the basic premise is that members can only get care from specific service providers – assuming they don’t want to pay all the fees! When you register for the HMO program, you are limited to specific doctors, hospitals and pharmacy networks. Your health plan pays these suppliers according to the agreed fee, and you don’t have to worry about “what will happen if the cost is higher” No: This is part of the HMO protocol.

Generally, HMO plans also include cost limiting measures, such as requiring people to see a primary care doctor before seeing a specialist. In theory, people may think they need a therapist (read: more expensive care), but in fact, their primary care doctors will be able to deal with this problem.

PPO plan

After the enactment of the Employee Retirement Income Security Act (ERISA), the Preferred Supplier Organization (PPO) began to appear in the 1980s. When employers began to insure themselves, the HMO model did not work because ERISA provided them with new freedom in the state insurance regulations.

PPO, rather than being an insurance company like most HMOs, is more like a contract coordinator.

PPO supports logistics between suppliers and insurance plans (whether full insurance or self-financing). Under the condition that the health plan is fully covered, insurance companies use PPO mode, just like self-insurance employers, even if they are not insurance companies.

In the past 40 years, PPO plans have become a popular choice for group and individual health insurance, because they provide consumers with more choices of care places. Generally, PPO network is wider than HMO. Members of the program are still limited to participating suppliers, but this is different from HMO.

POS plan

Although POS is an unfortunate acronym, it does not represent your idea. Point service package is a combination of some HMO functions and some PPO functions. Importantly, members can choose the people they want to meet and the amount they want to pay at the “service point” POS plan is essentially HMO’s response to consumers’ freedom of choice through PPO. They provide members with the option of paying more to meet non-participating suppliers or reducing costs by sticking to HMO’s own supplier team.

After formulating these three types of controlled care plans, it is important to recognize that there are other types of plans, and even in these types of plans, subtle differences will have a significant impact on the members of the plan. The whole process may confuse employers, project members, doctors and patients. Fortunately, the person responsible for selling medical insurance to the public must obtain permission to do so, which is accompanied by a large number of educational requirements. Although the blog is large, it cannot be replaced.

Part 2: Health insurance benefits in the United States

Medical insurance and other related benefits are not everyone’s favorite topics. Fortunately, we are insurers. Therefore, if you want to know about the status of medical insurance in the United States, you have come to the right place. Read on to learn about the time we call “now”. In fact, we will review the 1990s to today (2020).

Although many changes have taken place in the past 30 years, mainly due to the Affordable Care Act (ACA), many challenges related to health insurance benefits in the United States are still the same, if only to see more clearly and painfully. When we talk about the current medical welfare situation in the United States, we mean the success and failure of the system from its early development to today.

Where do Americans buy medical insurance?

According to the 2020 U.S. Census, more Americans receive health insurance through employer-funded private insurance than through any other single source. Medical insurance ranked second, followed by Medicaid, followed by many other private and government purchase options.

Then there are many people without insurance. Of the US population (332 million in 2022), 31.6 million people (9.7% of the national population) still have no insurance. Although this number must be high, it is indeed a progress in the past few decades. The decrease in the number of Americans without insurance is at least partly attributable to the efforts of medical reform, which largely constitutes the history of American welfare today.

The crisis of Americans without insurance

By 1991, a problem appeared in two directions: the rising cost of health care and the increasing number of Americans without insurance. This question sounds familiar to most (if not all) of our readers. After all, today you can’t wave squirrels without hearing about “rising medical costs” But you may be surprised to find that medical expenses, including the inability to obtain affordable medical insurance, have been a problem since 1980, if not earlier!

In 1992, a monthly study of the current population survey (CPS) conducted by the United States Census Bureau from 1980 to 1991 found that:

  1. Income is the “most important factor” for families to decide whether to buy medical insurance (except for the elderly, who are mainly covered by medical insurance).
  2. Children in families with too much income to qualify for Medicaid but unable to afford medical insurance are most likely to be uninsured.
  3. In the late 1980s and early 1990s, the labor force turned to work in the service industry. Even full-time employees who worked all year round were unlikely to provide insurance.
  4. In terms of the number of people covered, there are significant differences between regions (many of which are still the same).

In general, more than 34 million people (about 13% of the population) did not have insurance in 1991. This seems to be a lot for researchers at that time, but this number will only increase in the next 20 years. In 2006, 47 million Americans (15.8% of the population) did not have insurance. In 2010, this number increased to 48.6 million (16% of the total population). In this case, the figure of 2022 seems not so bad.

The cost of health care in the United States is rising

Without health insurance, millions of Americans are already paying for their health care. Although this was controllable at the beginning of the 20th century, the progress of medical technology, general inflation factors, corporate greed in the form of biotechnology and pharmaceutical profits are increasing. High medical management costs (and many other factors) drive up the price of health care. Come back. It is no longer a doctor beating a neighbor’s broken leg with a stick and belt, nor is it the growth of carrots in summer.

According to the percentage of gross domestic product (GDP), the medical expenditure of the United States has almost quadrupled, from 5% in 1960 to nearly 20% in 2020. Not only has the percentage of GDP spent on health care increased significantly, but it is also worth noting that since 1960, GDP itself has been soaring – which means that the real growth of health care expenditure is very high compared with the growth in the middle of the last century.

Even after decades of inflation adjustment, from 1960 to 2013, health care expenditure was almost twice (5.5%) that of other sectors of the US economy (3.1%).

With this in mind, it is not surprising that medical professionals, ordinary Americans and politicians are looking for solutions to the cost, affordability and availability of health care.

Early efforts of medical reform

In the first part of the welfare history series, we discussed the earliest medical insurance formed in the United States and some of the earliest attempts to promote such insurance. Needless to say, these efforts have not been successful. In addition to the great achievements in creating medical insurance and Medicaid, most Americans have only limited choices, high premiums and insurance coverage, which may be restricted and determined by insurance companies seeking profits.

As we enter the end of the 20th century, some remarkable cases of medical reform attempt to completely change the way Americans receive and pay for medical care.

Clinton Healthcare Plan in 1992

Before Obamacare reform, there was Hillarycare. Alas, although the name may be very attractive, this medical reform effort is not so. When Bill Clinton ran for president in 1992, one of his main campaign platforms was to make health care more affordable and accessible to ordinary Americans. He is ambitious to pass medical reform legislation within the first 100 days of taking office. Spoiler alert: It doesn’t work.

Clinton introduced the Medical Safety Act at the joint session of Congress on September 22, 1993. In this year, Congress did the best it usually did: nothing. The Act expired on 26 September 1994. If passed, Clinton’s Health Security Act will be a revolution. It calls for universal insurance for every American and requires employers to pay 80% of the average cost of each employee’s health plan. In addition, the bill will also provide government support for the health plan of small businesses and the unemployed or freelancers. The bill also includes the addition of mental health insurance and drug abuse in the health plan.

Although it was not passed into law at that time, many concepts in Clinton’s Medical Safety Act will reappear in future medical reform efforts.

Romneycare, Massachusetts

Massachusetts Governor Mitt Romney signed the state’s medical reform into law in 2006, unintentionally laying the foundation for future federal law. Although known as “Romney care”, the Democratic-controlled legislature rejected Romney’s veto to remove key provisions from the law.

Therefore, thanks in part to Romney, but more importantly, thanks to his opposition party, the House and Senate, Massachusetts has become the first state in the United States that has almost achieved universal health care.

The Massachusetts Health Care Act does something that sounds familiar to those familiar with the Affordable Health Care Act.

The law requires all Massachusetts residents over the age of 18 to purchase health insurance (with a few exceptions).

According to the law, employers with more than 10 employees must provide health insurance benefits for employees, otherwise they will face economic penalties.

It provides subsidies to those who are not eligible for employer-funded medical insurance to help them purchase affordable personal contracts.

It set up a statewide agency to help people find affordable health insurance plans.

When Massachusetts’ health care reform legislation was signed, Vermont and San Francisco soon complied with their almost universal health care laws. Romneycare has been proved to be successful, at least in reducing mortality. At least, it has proved that it is possible to achieve almost global coverage, albeit on a small scale.

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History of medical insurance: past, present and future (Lesson 1)

History of medical insurance: past, present and future (Lesson 3)