NOTES ON THE BROUHAHA OVER OBAMACARE (part 2) When World War II ended tens of thousands of medical personnel returned from the military looking for jobs. Some went into newly established VA hospitals, but others looked to civilian solutions and found them often linked with state-run hospitals. Now virtually no doctor or hospital ever turned patients away for an inability to pay, but fees were starting to rise simply because of the increased infrastructure. An analysis of what was happening in Europe, Asia, and Africa now took place among American political leaders. Those countries were economically devastated by the war. No private capital existed and the United States, through such programs as the Marshall Plan worked to rebuild those countries, loaning and generally giving (as no country yet has paid back to the US its war and post war debt) massive amounts of money to help their governments get back on their feet. Those governments then implemented what we now call socialized medicine, simply out of necessity—no private individual or company could afford to build a medical facility, let alone properly staff it; the only entity capable of such an action was the government, which did so (with capital from the United States). And an apparently simple and relatively inexpensive way to fund such operations was through taxes, as opposed to “user” fees. American politicians looked at this system with envy. If you’re a cynic, that envy was centered on the ability to control such a large and important section of the economy. If you’re an idealist, it was the ability to treat people “for free,” defraying rising costs among the entire population. However, the idea of “socialized” medicine was anathema to the American medical industry and the population generally, and the impracticality (not to mention unconstitutionality) of converting a free enterprise system to a government one averted that action. Instead, the government looked at a new, post-war innovation: medical insurance. For two decades, Americans had become used to paying for hospitals, and now enterprising insurance companies began to sell medical insurance—they would compensate a person for his medical expenses. At this early stage of the game there were no deductibles and low premiums, no medical exams, and no approval processes. And people were snapping them up. For $1 a month, you could get insurance. These insurance contracts were classic contracts of indemnity: if a person suffered an illness or injury, he paid the doctor and hospital and provided his proof of liability to the insurer, who was then obliged to compensate him, if the illness or injury was covered by the insurance policy. The doctor and hospital never knew whether insurance existed or not as they just billed the patient, and received payment from the patient. Congress saw this burgeoning industry and thought this was the perfect way to (a) collectivize/socialize the medical industry (either idealistically or cynically), and (b) get somebody else to pay for it (see my two digressions above). Thus, legislation was introduced that made it legal for a third party to pay a medical insurance premium, and the payment of such a medical insurance premium was tax deductible by an employer, thus opening the door for government control. At this point, the medical insurance industry effectively ceased being operated under the rules of a free market system. It began its long inexorable journey toward socialized medicine.
Posted on: Sun, 17 Nov 2013 04:56:04 +0000
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