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Tuesday, July 04, 2006

NEJM Health Policy report-employee sponsored medical insurance

Since employer-sponsored medical insurance is the cornerstone of health care in the U.S. physicians will be well advised to be aware of-at least- the basics of the history of that phenomenon. A non-exhaustive primer can be found in the July 6,2006 issue of NEJM written by David Blumenthal.("Employer-Sponsored Health Insurance in the United States-Origins and Implications"NEJM 355:1,p.82)

We are told that it may have been the opposition from the then apparently much more powerful AMA and possibly Roosevelt's friendship with his in-law Dr. Harvey Cushing that led to the omission of national health insurance from the Social Security law.

The relationship of the price and wage controls from WW II and the rise of employee hospitalization insurance ( people apparently went to the hospital back then when they were sick) is discussed, along with the ruling that such benefits should be considered part of the wage package and therefore part of union contract negotiations. Tax code provisions made employer medical insurance plans beneficial to employee and employers.

One example of [presumably] unintended consequences is the effect of the 1974 passage of ERISA leading to many large employers becoming self insured and thereby being largely exempted from state regulation of the coverage and small employers facing higher costs to provide insurance.

Much less well know is the 1990 ruling by the Financial Accounting Standards Board (FASB),which is the group that sets the rules for the accounting industry.By ruling that companies who covered health care of retirees had to carry those future liabilities on their balance sheets , the assets of many companies were reduced, stock values fell and as a result a number of firms stopped the practice of offering such coverage.

Another useful overview of how we got to where we are now can be found at the University of Nebraska web site in their video library of grand rounds in which Dr. Lynell Klassen discusses " The Practice of Medicine in 2011".

For a reader who has the time and energy to dive deeper into this issue, Paul Starr's book "The Social Transformation of American Medicine" is still in print and appears to be an obligatory reference for any review of the subject.

1 comment:

Anonymous said...

I don't think this quite grasps the idea. The origin of Blue Cross-Blue Shielf as I remember the story was in Dallas, Texas in the 1930s. The school teachers wanted some means of insuring for hospitalization and surgical fees. The hospitals and surgeons were happy. This suggested they might get paid, when on many occasions in the past they were paid a bit and usually late.
It grew like topsy. The unions demanded similar insurance, then the largest corporations began offering health insurance.
When I was a young resident in Detroit in mid 1960s, I found the UAW had gotten the big three to cover out-patient procedures (radiology, etc). Next quickly came coverage for the doctor seen as an out-patient. And now we are in a mess. No one wants to either pay for medical care or take responsibility for their own health.