History and Evolution of Health Care Economics
According to "American Economic Association" (n.d.), “Economics is the study of how people choose to use resources. Resources include the time and talent people have available, the land, buildings, equipment, and other tools on hand, and the knowledge of how to combine them to create useful products and services” (Para. 1-2). Economics deals directly with all aspects of our economy whether good or bad, and is an essential part of any business and health care is no different. The health care industry and economics have transpired and evolved since the early 1900’s when the American Medical Association (AMA) grew to become a powerful association in the country, and health care economics are still ever present now in the early 2000’s ("Pbs.org", n.d.).
Health Care Funding Timeline Health care economics has a wide history and timeline that goes back to the early 1900’s when the American Medical Association first became a very powerful force in America. In the early 1900’s, the number of physicians went from 8,000 to a booming 70,000, this was only the start of what became known as “organized medicine ("Pbs.org", n.d.). It was during this time it that providers became less expected to offer free services and began to charge in hospitals. Additionally, another breakthrough happened in 1900, which were railroad employees were offered medical programs, or what we would refer to today as employees benefits ("Pbs.org", n.d.). In 1910 it became more expected for hospitals to use sanitary guidelines and practice cleanliness. Also during this time the American Medical Association began to propose ideas for health insurance, known then as “social insurance”. However, there was much conflict on the topic that it took many years for it to come to play, especially with a war on the horizon (“Pbs.org, n.d.). In the 1920’s health care reformers brought to light the concern, especially for the middle class, that health care expenses were becoming along with lost wages due to health problems. During this same time, not surprisingly, health care physicians became to be known as “prestige” making a considerable amount of money for their services. Also during this era GM (General Motors) teamed with MetLife (Metropolitan Life) to offer all 180,000 of their employee’s medical insurance. This era also brought along the groundbreaking discovery of penicillin, however it would be another 20 or so years before it was used for major illness recovery ("Pbs.org", n.d.). The depression in the 1930’s brought along new insights into health care coverage, it was more important for elderly people and unemployed individuals to have some kind of health insurance. During this time the Social Security Act passed leaving out health insurance benefits. Also during the 1930’s even though it was highly frowned upon by many insurance professionals, Blue Cross began to privately insure people for hospital care among many states ("Pbs.org", n.d.). In the 1940’s penicillin began to be used to cure infection and some disease saving many lives. With World War 2 employers began to get desperate for workers so they began to compete for employees offering better health insurance than the next guy. During this time President Roosevelt began to ask congress for an “economic bill of rights," including right to decent and full medical care ("Pbs.org", n.d.). During the 1950’s health care expenditures rose to become 4.5 percent of the Gross National Product ("Pbs.org", n.d.). Also during this era it became clear the federal government should be the ones responsible for the poverty stricken sick people, and it became firmly established. It was in this time period that the hospital prices in America nearly doubled making it harder for people, especially the elderly, to be able to afford treatment ("Pbs.org", n.d.). In the 1960’s insurance