Health Insurance worked best before the 1962, before
Vatican II. Catholic Nuns ran their
hospitals and raised funds to hire the best doctors, buy equipment and expand
facilities. Other churches and charitable groups like the Shriners did the
same. The cost of a hospital room was $24 per day and the cost of individual
Blue Cross was under $25 per month. When
the Nuns left after Vatican II, they sold their hospitals to private companies
and things got pricy. Before 1962, hospitals established their fees based on
their actual costs. After these hospitals were sold, the new management started
establishing their fees based on what they could get away with.
Health Insurance was largely employer sponsored.
Many companies were self-insured; they established Medical Trusts, offered
their own coverage options (if any), had these claims administered by a
third-party-administrator and costs were low.
Many other companies continued to buy their Medical Insurance from
Insurance Companies and would secure bids every year.
I worked in St. Louis from 1965 to 1975. I left
Monsanto in 1971 and joined Washington University to establish the Personnel
function at the Medical Campus. I defeated the SEU organizing attempt at the
Medical Campus. I became friends with a lot of the Medical Faculty and got some
insights to where healthcare was going. Medical equipment was the future and it
was going to get expensive. My grandfather was an MD and graduated first in his
class in 1905 from Barnes Medical College that later became Washington
University Medical School. He was appointed Professor of Internal Medicine when
he graduated. He was a master diagnostician and surgeon and he did this with
very limited equipment, so I had a hard time believing that American Medicine
was headed in the right direction. Malpractice costs would add to the problems.
Reagan had to compromise with the Democrats to get
his tax cut passed and in 1986 it was clear that Insurance Companies wanted to
take over. The word went out to law firms to advise companies to drop their
self-insurance Trusts and buy medical insurance from the Insurance Companies.
In 1983, I dropped the Insurance Company plan for
Hayes Microcomputer Products, Inc. and set up a self-funded Medical Insurance
Trust and saved a bundle. We had 1000 employees when I left.
In 1986, I joined Electromagnetic Sciences Inc. and
they had a self-insurance Medical Insurance Trust and I became the
Trustee. I rewrote parts of the Plan to
avoid price gouging for addiction treatment and put in a “gatekeeper” and a
nurse-practitioner to work with the high cost families
In 1990, IRS 502 deductions were neutered by the
Individual Tax form. We could no longer
deduct 100% of our medical expenses on our Individual Tax Forms. We were
ordered to go to “annual election of benefits”.
We were allowed to have pre-tax treatment of our employee paid portion
of our Medical Insurance and a starter version of a Medical Savings Account.
The bureaucracy for handling Medical Insurance was exploding. Also HIPPA passed
and that was a farce.
By 1993, the total cost of the self-funded Medical
Insurance Trust was $150 per month per employee and we had about 1000
employees. The cost of switching to an Insurance Company was much higher.
In 1993, I was recruited to start a private
consulting practice for Atlanta Electronics Companies and worked with 45 of
these companies over the years. I saw
medical costs rise over those years to levels that were anything but
reasonable.
I remained on the Board of the American Electronics
association and wrote their position paper opposing Hillary-Care in 1993.
I watched in
disbelief at the passage of Obamacare in 2009 and witnessed the destruction of
US Medicine. Medical Insurance had always included “medical necessity” as its
criterion for payment. The job of medicine was to rescue and repair. Preventing
medical problems had always been the responsibility of the patient. County Medical Associations could suspend and
revoke licenses if malpractice occurred.
So, now here
we are. Medical costs have gone far beyond the price/demand curve. Heavy
subsidies and regulations by government and predatory Malpractice lawyers have
moved the price of medical care off the charts.
Like education and government, medical care is overpriced and
underperforming.
Norb
Leahy, Dunwoody GA Tea Party Leader
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