HCS 235 Week 1 The Evolution of Health Care Example

From Charity Wards to the Marketplace: Five Turning Points in the Evolution of U.S. Health Care and What Each Left Behind in Today's System

[Student Name]

University of Phoenix

HCS/235: Health Care Delivery in the U.S.

Week 1 Assignment

[Instructor Name]

[Date]

Prepared as a model paper; historical facts are drawn from the sources listed.

Students entering health administration often ask why the American health care system works the way it does: why most working-age adults get insurance through their jobs, why older adults and people with low incomes have separate public programs, and why a hospital bill passes through so many hands. The answers lie in history. This paper traces five turning points in the evolution of U.S. health care and, for each, explains what changed, why and what it left behind in the system a health administrator works in today.

Turning Point 1: The Modern Hospital

In the early nineteenth century, American hospitals were charitable institutions for the poor, often run by religious groups, and people with means were treated at home. Starr (2017) describes how that changed between roughly 1870 and 1920. Antiseptic surgery, anesthesia, X-rays and laboratory testing made hospitals places where middle-class patients could be treated better than at home. Nurses trained in hospital schools, and physicians came to depend on hospital privileges to practice. Hospitals began charging patients directly, and their number grew rapidly.

What it left behind: the hospital as the center of American medicine, a split between physicians who are often independent and the institutions where they work, and a tradition of nonprofit hospitals with community obligations, which shows up today in the community benefit rules that tax-exempt hospitals must meet.

Turning Point 2: Insurance Through the Workplace

Early prepaid plans appeared in the 1920s and 1930s, including the Baylor plan for Dallas teachers that grew into Blue Cross. The decisive growth came during World War II, when federal wage controls limited raises, so employers competed for workers by offering health benefits instead. After the war, rulings that employer-paid premiums were not taxable income for workers made the arrangement durable (Starr, 2017). By the 1950s, most working Americans with insurance had it through a job.

What it left behind: employer-sponsored coverage is still the largest source of insurance for people under 65, which is why losing a job often means losing coverage and why employers are among the most powerful stakeholders in health care.

Turning Point 3: Medicare and Medicaid, 1965

Employer insurance left out people who did not work: older adults and many poor families. After years of debate, President Lyndon Johnson signed Medicare and Medicaid into law on July 30, 1965, as amendments to the Social Security Act (Centers for Medicare and Medicaid Services, 2015). Medicare provided hospital and physician insurance for people 65 and older, and Medicaid, a partnership in which Washington and each state share the cost and the rules, covered certain low-income groups. Medicare also required participating hospitals to desegregate, which transformed Southern hospitals within months.

What it left behind: the federal government became the largest single payer of health care, and Medicare's rules on payment, quality and conditions of participation now shape how nearly every hospital operates. Medicaid's joint structure explains why eligibility and benefits differ so much from state to state.

Turning Point 4: The Managed Care Era

By the 1970s and 1980s, health spending was rising much faster than the economy. Medicare introduced prospective payment for hospitals in 1983, paying a fixed amount per diagnosis-related group instead of whatever the hospital charged. Employers turned to health maintenance organizations and other managed care plans that controlled costs through networks, prior authorization and capitated payment. Enrollment in managed care grew rapidly through the 1990s until a backlash from patients and physicians against restrictions led plans to loosen their rules.

What it left behind: diagnosis-related groups, networks, prior authorization and utilization review, all still daily parts of health administration work. The billing office's struggles with authorizations and the hospital's focus on length of stay both trace back to decisions made to slow spending forty years ago.

Turning Point 5: The Affordable Care Act

Despite employer insurance, Medicare and Medicaid, tens of millions of Americans remained uninsured in the 2000s. The Patient Protection and Affordable Care Act of 2010 expanded Medicaid to more low-income adults in states that chose to participate, created marketplaces with subsidies for individual insurance, barred insurers from denying coverage for preexisting conditions and allowed young adults to stay on a parent's plan to age 26. Obama (2016) reported that the uninsured rate fell from 16.0% in 2010 to 9.1% in 2015.

What it left behind: marketplaces, expanded Medicaid in most states, protections for people with preexisting conditions and a shift toward paying for value, including accountable care organizations and penalties for excess readmissions.

A Thread Running Through All Five

One thread connects the five turning points: each change was a compromise between expanding access and controlling cost, shaped by who held power at the time. Hospitals grew because physicians and middle-class patients wanted them. Employer insurance spread because it suited both companies and unions during wartime. Medicare and Medicaid passed only after years of resistance from organized medicine, and they were designed to leave existing private insurance in place. Managed care rose because employers and government were paying the bills and wanted them smaller, and it retreated when patients and physicians pushed back. The Affordable Care Act built on employer coverage and private insurers rather than replacing them. Seeing this pattern helps explain why American reform tends to add layers rather than start over.

Lessons for Health Administrators

Three lessons follow. First, the system was built in layers, each added to fix gaps left by the one before, which is why it has so many payers and rules. Second, cost control has shaped the system as much as access has; prospective payment and managed care still govern how hospitals are paid. Third, change is ongoing. Administrators will work through further reforms, and understanding why earlier ones happened helps in reading the next.

Conclusion

The modern hospital, employer insurance, Medicare and Medicaid, managed care and the Affordable Care Act each answered a problem of its time and each left something permanent behind. Together they explain much of what a health administrator meets every day, from the payer mix on a financial report to the prior authorization on a scheduled procedure.

References

Centers for Medicare and Medicaid Services. (2015). Medicare and Medicaid milestones, 1937-2015. https://www.cms.gov/About-CMS/Agency-Information/History/Downloads/Medicare-and-Medicaid-Milestones-1937-2015.pdf

Obama, B. (2016). United States health care reform: Progress to date and next steps. JAMA, 316(5), 525-532. https://doi.org/10.1001/jama.2016.9797

Starr, P. (2017). The social transformation of American medicine (Updated ed.). Basic Books.