IM_Ch09
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Feb 20, 2024
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T E S T B A N K S E L L E R . C O M
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C H A P T E R 9
HISTORY OF CHANGE FROM 1900 TO 2010: INCREMENTALISM SUMMARY During the 20th century, the health care delivery system changed dramatically, but incrementally, through efforts of both the public and the private sectors
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in the American tradition. Some changes were intended to improve access to health care. Others changed organizational structure and financing mechanisms to contain health care costs and improve efficiency. In the early years of the century, changes focused on providing access to health care. The private sector tended to develop voluntary, nonprofit health care initiatives. Health insurance was provided to nonmilitary persons by private-sector insurance companies, which at first covered the employed and their families. Until mid-century, the largest of these insurance companies was Blue Cross Blue Shield, which created voluntary, nonprofit companies nationwide. Public-sector efforts at this time were primarily for the military, military families, and veterans. Hospitals were built by the private sector as voluntary, nonprofit institutions, often by religious groups, and by government, particularly for the military. Throughout the latter part of the 20th century and into the 21st, complex organizational arrangements developed including HMOs and managed care organizations. Both of these were premised largely on paying for health services through capitation, rather than indemnity insurance. This practice transferred the risk to health care providers from health care payers (insurers). Also, for-profit initiatives developed in both health insurance and health care delivery organizations. Blue Cross Blue Shield affiliates were permitted to become for-profit entities in 1994. Beginning in 1965, federal programs provided health insurance to low-income (Medicaid) and retired persons (Medicare), and later still to uninsured children (CHIP), leaving the private sector to continue serving the employed population and a small number of individuals.
LEARNING OBJECTIVES After completing this chapter, students will be able to: •
Describe the major developments of the 19th century that laid the foundation for the current health care system. •
Describe the incremental changes made to the U.S. health care system during the 20th century to provide access to health care. •
Describe the incremental financing and organizational changes made to the U.S. health care system during the 20th century and how they addressed cost and efficiency problems. •
Define major organizational developments of the 20th century including health maintenance organizations (HMOs), managed care organizations, and integrated delivery systems (IDSs).
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SUGGESTED ANSWERS 1. What foundations of the modern health care system evolved from the Civil War? The Civil War had the following impact on the modern health care system: • Improvements in surgery made during the Civil War and application to medicine of advances in bacteriology by scientists such as Louis Pasteur. The latter affected the physician’s ability to control infectious diseases
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the leading causes of death at that time. Both advances made the practice of medicine more successful in treating health problems. • Demand for therapeutics fueled by the Civil War, which provided the start for some of the largest names in the modern pharmaceutical industry: Wyeth, Pfizer, and Squibb. • Founding of the U.S. Nursing Corps in 1861 and with it the idea of professional nursing and its importance to medical care. • Development of the Ambulance Corps during the Civil War, creating the ambulance-to-
emergency room system we know today and establishing a hierarchy of treatment stations and hospital facilities (National Museum of Civil War Medicine, 2016). 2. What was the focus of incremental changes in the U.S. health care system during the first half of the 20th century? With medicine’s improved ability to cure disease and treat chronic conditions, the demand for care increased, as did its cost. In response, a major focus of health policy since the early 20th century has been assuring access to health care. Broadly speaking, this effort has been twofold: • Provide health insurance in order that patients can afford care and providers are compensated for their services • Build facilities, particularly hospitals, needed to provide health care. Both efforts developed in ways that reflect the American preference for private/public policy solutions. Both public and private sectors were involved in providing health care coverage and building the American health care infrastructure. As a result, health care access varied for people in different groups, ranging from insufficient to abundant. STUDY QUESTIONS 1. What foundations of the modern health care system evolved from the Civil War? 2. What was the focus of incremental changes in the U.S. health care system during the first half of the 20th century? 3. How is capitation different from indemnity health insurance? 4. What are the characteristics of HMOs and managed care organizations, and how are they similar? 5. What is an example of a for-profit health care organization? 6. What is a horizontally integrated health care organization? 7. How did the incremental changes to the U.S. health care system conform to the American preference for public/private policy solutions?
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T E S T B A N K S E L L E R . C O M
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3. How is capitation different from indemnity health insurance? Capitation and indemnity health insurance are two contrasting ways to pay health care providers for their services. At the heart of their differences is who assumes the risk for cost of the care
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the health care provider or the health care payer. This is how they work. • Capitation is the practice of paying a flat fee to a health care provider in exchange for a stipulated range of services for an individual during a given time period, usually a year. The flat fee guarantees medical coverage for that person, regardless of how much or how little care the individual needs or uses. • Indemnity health insurance reimburses an individual for fees paid for medical services after they are performed. Payments may be made to the patient or directly to the provider, on a retrospective, fee-for-service basis. 4. What are the characteristics of HMOs and managed care organizations, and how are they similar? A health maintenance organization (HMO) is a health care system that assumes or shares both the financial risks and the delivery risks associated with providing comprehensive medical services to a voluntarily enrolled population in a particular geographic area, usually in return for a fixed, prepaid fee. Pure HMO enrollees use only the prepaid capitated health services of the HMO panel of medical care providers. Open-ended HMO enrollees use the prepaid HMO health services but, in addition, may receive medical care from providers who are not part of the HMO panel. There is usually a substantial deductible, copayment, or coinsurance associated with the use of nonpanel providers. HMOs are one type of managed care organization.
Managed care plans are health insurance plans that contract with health care providers and medical facilities to provide care for members at reduced costs. These providers make up the plan’s network. How much of your care the plan will pay for depends on the network’s rules. Restrictive p
lans generally cost you less. More flexible plans cost more. The three types of managed care organizations are as follows: • HMOs • Preferred provider organizations (PPO), which usually pay more if the patient gets care within the network, but they still pay a portion of the care if they go outside • Point-of-service (POS) plans, which let patients choose between an HMO and a PPO each time they need care 5. What is an example of a for-profit health care organization? Health insurers including Aetna, CIGNA, Humana, the United Health Group, and WellPoint Health Network are for-profit organizations. 6. What is a horizontally integrated health care organization? Horizontally integrated health care organizations are those that include two or more of the same kinds of service units. The multiunit hospital system is an example
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two or more acute-care hospitals are owned, leased, or managed by a single corporate entity. There has been tremendous growth in hospital systems. In 1970, there were fewer than 50 nongovernmental multiunit hospital systems in the United States. By 1981, this figure increased to 256; 53% of the systems included only two or three hospital units, whereas 13% included 11 or more units. Approximately one-third of all nongovernmental hospitals in 1981 were included in multiunit systems. Today, it is even higher. TESTBANKSELLER.COM
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7. How did the incremental changes to the U.S. health care system conform to the American preference for public/private policy solutions? By the end of the 20th century, the incremental changes in the health care system incorporated both the public and private sectors. For example, private health insurance provided access to employed persons, while public programs such as Medicare and Medicaid provided access for persons without employee health insurance. Both sectors served a large percentage of the population. TESTBANKSELLER.COM
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