Modes of Paying ofr Health Care
Out of Pocket Payments
Need Versus Luxury
Unpredicatability of Need and Cost
cannot asses the likelihood or cost
Patients’ Need to Rely on Physicians’ Recommendations
Individual Private Insurance
Currently only 9% of population
Employment based Private Insurance
1929 Dallas schoolteachers insured at $6/year for 21 days of stay durring the depression--done to keep hospital revenues up--spread durring the depression--formed Blue Cross plans
Blue Shield sprung up for physicians durring the dpressin
BC and BS were both local organizations
Wage freezes durring WWII forced employers to offer health insurance as benfits--unions started demanding it--dramatic ries in enrolled population (12 million in 1940 yo 101 million in 1955)
Federal gov. does not tax company contributions to employee health plans--in effect subsidizing them ($75 billion in 1992)
EXPERIENCE RATING introduced with private insureres which came into being with the increase in demand after WWII
COMMUNITY RATING--one fee per community--redistributes money from the healthy to the sick--BCBS
competition forced BCBS to abandon Community Rating and move to Experience Rating which mad eit harder for older and more sick people to get insurance
Net effect: patients were buffered from the actual cost, physicians and hosptials controled BCBS--rise in prices
Government Financing
Redistribution of welath--encouraged rises in costs
The Burden of Financing Health Care
regressive payments--more if you’re poorer--out of pocket, experience rated
government financed health care is proportional
overall regressive
Conclusion
private insurance raised costs whcih neccesitated governemtn insurance which further raised costs