I like the direction we’re headed with Obama’s recently passed healthcare reform bill, but the fact remains that the American healthcare system is still a mess. To understand where we are right now, we have to look at where we’ve been. The healthcare crisis didn’t pop up overnight: it’s been brewing for  over a century. PBS produced a healthcare timeline that lays out, decade by decade, the evolution of American healthcare since 1900. Here I summarize it and define its more technical terms.


In 1901, the American Medical Association (AMA) reorganizes as the national organization of state and local associations, and over the next decade membership increases from 8,000 physicians to 70,000. Drumroll please…“organized medicine” has begun.


Progressive reformers advocating for more health insurance seem to be gaining public support until the 1917 entry of the US into WWI undermines their efforts. (At this point, people usually just pay doctors for individual visits and services. You could call it a “pay-as-you-go” system.)


Prosperity + political complacency à no strong efforts to change healthcare

General Motors signs a contract with Metropolitan Life to insure 180,000 workers


The Depression à greater focus on unemployment insurance and “old age” benefits than on health insurance

Social Security Act is passed but does not include health insurance

Against the advice of insurance professionals, Blue Cross begins offering private coverage in many states


Prepaid group healthcare, which is seen as radical, begins

During WWII, wage and price controls are placed on American employers, who begin to offer health benefits to entice potential employees. This gives rise to the employer-based system in place today.

Truman pushes a national health program plan that would include all Americans, but it’s shot down by the AMA and called a Communist plot by a House subcommittee. (Just like how Obama’s plan is labeled Communist, Socialist, fascist, etc. today: incorrectly.)


The price of hospital care DOUBLES. Those outside the workplace are having a harder and harder time affording insurance.


There are now over 700 healthcare insurance companies

President Johnson signs Medicare and Medicaid into law

Things aren’t looking good for supporters of  “Compulsory Health Insurance”


President Nixon renames prepaid group health care plans “health maintenance organizations” (HMOs)

Unexpectedly high cost of Medicare + economic inflation + rising hospital expenses (and profits) + greater use of technology & medications à skyrocketing healthcare costs. The words “healthcare” and “crisis” are first used in the same sentence. 


Corporations begin to integrate the hospital system, previously a decentralized structure. Overall shift to privatization & corporization of healthcare.

Under President Reagan, Medicare shifts to payment by diagnosis instead of by treatment. Patients are classified into one of about 500 groups (diagnosis-related groups, or DRGs) expected to have similar hospital resource use. Private plans quickly do the same.

Insurance companies complain that doctors are exploiting the traditional fee-for-service reimbursement, which encourages a doctor to over-prescribe, over-diagnose, and over-treat because he earns a net profit on each visit and procedure. Capitation payments become more common, with a doctor paid a set amount for each patient assigned to him – encouraging a doctor to reduce the effort spent on each patient.


Health care costs rise at double the rate of inflation

Expansion of managed care (techniques intended to reduce the cost of providing healthcare) moderates increases in health care costs – at first.

Federal health care reform legislation fails again to pass in the U.S. Congress. (Remember “Hillarycare”?)

By the end of the decade there are 44 million uninsured Americans. 44 million too many.


Health care costs still rising. Duh.

People start realizing that Medicare is doomed.

Direct-to-consumer advertising for pharmaceuticals and medical devices is on the rise. (“Ask your doctor if ____ is right for you!”)

2010: Obama healthcare reform bill passed…but THAT’s a whole other post.