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Health Insurance

"Compulsory sickness insurance...is a variety of socialized medicine or state medicine and possesses the evils inherent in any politically controlled system. It is contrary to American tradition and is the first and most dangerous step in the direction of complete state socialism. The American Medical Association rejects any such scheme as a method of the distribution of medical care." - Editorial from The Journal of the American Medical Association, Dec. 1948

In 1983, the Federal Government passed legislation that would pay the hospitals a portion of Medicare patient bills, based on a set fee determined by one of 467 diagnosis-related groups. This legislation marked a major turning point in the financing of medical care. Prior to this, the government paid what was billed. Many private insurers adopted a similar system of reimbursement. Later, capitation entered the picture as another financing method; it is a fixed payment per patient, per year that shifts some of the burden of risk away from the insurance company or health maintenance organization (HMO) and on to the doctor.

Where do people get health insurance? Employers are the primary source of health insurance in the United States, covering 120 million people. But the government provides coverage to a large number of Americans both as an employer (39.2 million for Federal, State and Local government employees, including the military) and through public insurance programs such as Medicare (39 million) and Medicaid (41 million).

How much does health insurance cost? The cost of health insurance has increased dramatically over the past decade, far surpassing the general rate of inflation in most years. Between 1989 and 1996, the average amount an employee had to contribute for family coverage jumped from $935 to $1,778. In 1990, American companies spent $177 billion on health benefits for workers and their dependents; that number rose to $252 billion by 1996, or more than double the rate of inflation.

Who pays for the rising costs of health insurance? Employees, consumers and taxpayers pay. Businesses pass along a portion of rising premiums to their workforces in the form of lower wage increases. Companies add the cost of the fringe benefits, including health insurance, to the price of their products and services. Government programs pay 47 percent of the health care tab in the U.S.; spending on health care makes up 20 percent of the federal budget, and most state budgets too. If you paid $5,000 in taxes last year, around $1,000 went to health care programs. (source: http://www.nchc.org)

"There are peculiarities in how we have insurance coverage today that we probably wouldn't duplicate. It may be possible that we can evolve into a more sensible strategy over time. It's important to have an idea about where you want to go, what you would like health care financing delivery to look like. It's just how you get there and whether you attempt to displace or destroy what you have now, which works pretty well for large numbers of the population. That's something we're not inclined to do, as opposed to making gradual steps and improvements to try to get to a better type of delivery system." ---Gail Wilensky, Project HOPE Center for Health Affairs

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"We developed HMOs initially on an older pattern of what was called prepaid group practice, like organizations to provide health care such as Kaiser Permanente or Group Health Cooperative in Puget Sound. These organizations were both providers of care and insurers. Now in the 1990s these two roles, through the managed care movement, have tended to split apart. So we've got "HMO" as a term increasingly being used as the insurance part and not for the delivery part. The HMO, the insurer, had a network of providers, a network of doctors, and network of hospitals, but it didn't feel responsible for providing the care. It was a contractor of a network. And in the last 10-15 years, doctors have tried to get together into networks of various kinds. A lot of those haven't worked very well. Hospitals have been developing their own health care systems. A lot of those haven't worked very well. There's a crisis in many of these organizations. And somehow or other we have to bring these two aspects back in line, the insurance, on the one side, so that people are adequately insured, and also the networks that provide the care, on the other. The question is, how do you make sure people have to access the entire health care system? How is this behemoth of hospitals, of groups of doctors, specialty groups in many cities, home health services working in different corporations -- how are you, the poor subscriber of the health insurance, going to be assured that all of these are going to work for you?" -- Rosemary Stevens, PhD, Professor, History & Sociology of Science, University of Pennsylvania

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