Saturday, June 21, 2014
Cost
The article on page 8 of the May 5 issue of Modern
Healthcare was titled Spending jump
puzzles providers. The article on
facing page 9 was titled Insurers brace
for high-cost Sovaldi. Sovaldi is
the medicine that treats Hepatitis C at a cost of $84,000 per patient.
While we are understandably concerned about the high and
rising cost of care, we pay no attention to how we got into this situation.
For most of recorded history, healthcare was paid for by the
sick and injured. Patients paid for care
when they received it.
Then in the 1930’s, somebody in Dallas invented what became
Blue Cross. For a modest monthly
payment, school teachers who subscribed were guaranteed that when they needed
hospital care it would be paid for, within defined limits. So now hospital care was being paid for by
well people rather than by the sick and injured.
During World War II, the federal government, responding to
pressures to raise wages, decided that employers could provide health insurance
to employees without its value being considered taxable income to the
employee. Under that arrangement, health
care would be paid for by employers.
During all this time, health care for those unable to pay –
the so-called medically indigent – was largely the responsibility of local
governments and private charity. The
cost of care gradually grew beyond the capacity of these sources and in 1960,
the federal congress enacted the Kerr-Mills bill, which provided matching
grants to the states to be used to pay for health care for the medically
indigent aged. This added federal and
state treasuries to the sources of money that supported health care.
Kerr-Mills never worked very well and Medicare and Medicaid
were adopted in 1965. Medicaid was a
more workable federal and state program of funding health care for the
medically indigent. Medicare was for
seniors, and was financed by a national payroll tax – causing health care for
retired seniors to be paid for by the employed population.
Medicare as originally adopted did not cover prescription
drugs. That omission was rectified in
2003 with the enactment of Part D – which included a healthy federal subsidy.
Despite all these initiatives, a sizeable portion of the
population remained uninsured, an issue addressed directly by the Patient
Protection and Affordable Care Act (aka Obamacare) which was passed in 2010. It made health insurance mandatory, so that
much of the care for which providers had previously not been compensated would
now be paid for. The program also
greatly expanded the number of people eligible for Medicaid and provided
federally financed subsidies for those considered unable to pay the full cost
of health insurance.
And during all this time we have been encouraged by the tax
laws to donate money in support of health care.
So although we have long claimed to be worried about the high
cost of care, what we have done over the years is to tap every available source
of money to support it, with each measure increasing the amount of money funneled
to providers.
And we wonder why health care costs so much.
