Over time healthcare became a basic need (1950's-1960's), and the forces were there to ensure healthcare, because of the fact America is a democracy. The problem is largely due to the fact that layers are being added to the cost, as in, the majority of American's get insurance through their company. The old concept of direct purchase (Individual-Provider) is now looking like (Individual-Company-Provider). This becomes a cost multiplier, and since bills are submitted there is NO checking on price, and this price multiplier became the problem in the middle of the last century that lead to medicare and medicade.
When Medicare and Medicade were adopted, since they were subsidized by the government (they pay for it) prices went up simply for the fact that doctors and physicians could charge more since the government was paying for it. The fee-for-service method of healthcare for the elderly and poor was being paid for by the government, while others mostly got it from employers, and few paid for their own. As government covered these two vulnerable parties of our society, which is based on a non-profit system (as in the gov't gets the money from taxes and pays for the medical bills of the old and poor and do not profit from this in any way), the government has to control costs (since they were rising), but who at this point in time is dictating the costs? Answer: Insurance companies!
When these two were created in the 1960's the government said they wouldn't do the paperwork, and this was then contracted to out, to insurance companies such as Blue Cross Blue Shield. In this case insurance companies became "Fiscal Intermediaries" (which the government did setting up these 3 guidelines, sort of an outline for this):
1. Fee-for-service: Service system, doctor gives bill, government pays.
2. Negotiate: Government sets prices for specifics (treatment, conditions, etc.)
3. Agreed to depreciate medical technology on hospitals taxes: Good for hospitals and an incentive to get new technology. But, if the area around a hospital doesn't have enough people to fulfill the machines in a given year, it becomes a waste of money, AND another cost driver is found!
From 1965 to 1970 the percentage total of healthcare costs paid for by the government went from 26% to 37%, while the health inflation rate was at 21%. This brought on the call for national health insurance from places like labor unions (Ted Kennedy was all for national healthcare until his recent death). Richard Nixon was President now though, and he was not supportive of universal health coverage. In 1971 he attempted to freeze the cost of healthcare, but it did not work.
Nixon did establish the "Federal Professional Standard Review Organizations" which was contracted by the government to examine healthcare and how it was being utilized. For instance, if a large number of patients had the same procedure, why? It called on the trust of Physicians (was the length of time they kept patients too long?).
