The History of the Downfall of the Healthcare System

Today’s problems were yesterday’s solutions. 1940-1980

Part 1: How did the healthcare system start to fail?

It all started after World War II. The economy in

America

was booming. Corporations and business were growing rapidly and needed workers. These organizations provided health benefits to attract workers. The Health Insurance industry was born. Everyone’s “incentives were aligned.” The patient, the physician, the business, the government, and the insurance industry were all happy with the healthcare system post World War II.

   Patient: The patient had insurance to protect them financially if they got severely ill. The insurance was provided by the employer

   Physician: The physician was receiving payment from patients, whom he did not receive payment in the past from and his income rose.

   Business: Business had a relatively inexpensive and attractive employee benefit. Business needed employees in a fast growing post WWII economy.

   Government: The government could concentrate on developing medical schools and promote research in medical schools to advance medical knowledge and subsequently care.

   Insurance Industry: The insurance industry had a pure insurance product. The medical insurance plans post WWII had the power of large numbers of premium paying clients. This population of workers was relatively young and healthy. They did not spend lot money on healthcare, because they infrequently got sick. The young population did not utilize the premiums dollars paid to the insurance industry, resulting in a nice insurance industry profit at a low cost.

Medical expenses were smaller post WWII, because of the lack of medical knowledge and the lack of technological advances. Today, 80% of the healthcare dollar is spent on the complications of chronic disease that we patch, or fix. Sometimes we do neither. We simply have the ability to keep the patient alive. In the “Olden Days”, we could not do anything for the patient, and so they died and did not spend money.

What happened to this blissful era? All the major stakeholders were friends in those days and not enemies?

The population got older, overweight, stressed, greedy and angry.

Technological innovation made a big business of medicine and medical care.

In the next blog I will cover the first bump in the road leading to a dysfunctional system.