This is the Healthcare Marketplace Specialization Healthcare Marketplace

Overview.

My name is Stephen Parente and this is Module

1.2.1 Market Evolution: Pre-World War II.

So let's begin talking about the start of this healthcare market place development.

One thing that always concerns me is that

when people talk about the health care system today they say it's broken.

And they don't necessarily recognize that one of the things that make it the way

it seems today, it seems maybe broken he said it's a lot of actions over many

different actors over a period of time, and a lot of them are really smart people.

And they had their reasons, and they passed on, many of them are dead, but

it's good to know that history.

Because a lot of times history repeats itself in terms of intentions.

So we're going to begin by looking at things at the start of the 20th century,

with a focus on a man named Abraham Flexner.

Flexner was an academic and played a role actually working with

John's Hopkins University in redefining what medical education was.

And what Flexner did, was he put together a report where he graded the med schools

of the day in 1910 and was given money from the philanthropist of the day John D.

Rockefeller, Carnegie, and others, to more or less pick, hand pick,

actually, the medical schools that would likely survive.

And they used Johns Hopkins University in Baltimore as a model of an A school.

There are many B and C schools, that were effectively shut down.

This in the end, actually, really reduced the number of medical schools and

actually tighten the supply of physicians dramatically going forward.

There were new technologies being introduced in this period.

Radiology actually is a were coming online.

Salvarsan 606, basically, the first drug really made as,

not a potion that someone was handing to you, but actually as a pill.

There was the federal government starting to

get involved with the Pure Food and Drug Act.

This later becomes the heart of what will become the FDA.

The issue of concerned about just poisons being put into drugs and

other products that people just didn't realize were bad for them.

Like for example, mercury as a key ingredient for

a lifesaving treatment is not really a good idea.

And then also in long-term care, the notion most care is coming in rest homes.

Literally homes where folks would sort of go to either recuperate or not so

much recuperate and kind of eased over to the other side.

1910-1920, we enter World War I.

We don't yet have any form of a national health insurance program,

we do talk about it prior to World War I, but we don't do much about it.

One thing that comes out of World War I that's very important

Is the use of antiseptic medicine to reduce in hospital mortality rates.

And this carries forward in the civilian population in the 1920s.

The other thing as I mentioned before under the Wilson administration is our

first national health insurance attempt that fails, but it is a result,

then, what needs to be understood is that most of Europe had some form of national

health insurance, starting with Germany as way back as 1887.

Though granted, when we look at how Germany put it together with Otto von

Bismarck putting it forward, and

others, is that it was very much a political maneuver.

And actually today as we probably know health policy still remains

rather political.

1920 to 1930 the great depression begins with the crash in 1929 and

progresses on through the 30's.

Hospitals and

doctors are underutilized because basically people aren't afforded care.

Back in that day there wasn't insurance.

If you were going to go see a hospital or physician, you had to pay cash.

We also have the origin of Blue Cross in Baylor University

in Texas, 1929, basically started by the university administration to provide some

sort of a basic insurance package for hospital care.

That's what Blue Cross begins as.

We see also the beginning of group practices.

These are coming actually in from the west coast of the United States

from shipyards where they were already providing hospital care for

folks that were working in these heavy, industrial industries, and they realized,

well, wait, we could do it also for their families and wait, if we're also doing it

for their families, why don't we also sell this product to other folks.

And that becomes the basics for.

Kaiser premeditated the largest country today.

Food and Drug Administration, FDA is created in 1930 and

then also the Veterans Administrations is created in 1930.

The Veterans Administration is important.

People don't realize that the Veterans Administration is not part of

the Department of Defense otherwise known as DoD.

It actually is completely separate from that because After World War I there

was a concern that the military was not adequately looking after veterans.

And they needed to have their own set of funds that would not be shortchanged,

depending on the budget for making war, or not making war, as time went on.

1930's through 1940's.

One thing that's not always emphasised, os this group here the AMA.

If you Google the AMA actually the top Google

rank is the American Market Association.

But that's not which one we are talking about.

We're talking about The American Medical Association.

And they play a huge role in the way health care develops on United States.

Not talked about very much really in the last 20 years or

so, but they paid more money into lobbying against

having any sort of National Health Insurance than probably any other group.

Inflation-adjusted dollars, probably any dollars, going back for nearly 70 years.

They also were against socialized medicine and

by that they did not mean a government insurance.

They actually meant they were against group practices.

Group practices are all over the place today, but

at the time, the AMA made their money by dues, one physician at a time.

And so they would lose on that money if they actually had many group practices.

Philanthropists and also new deal legislation subsidized a lot of

the beginning of academic medical centers across the United States.

Hospitals and doctors continue today some of the utilization due to very poor

economic conditions though Blue Plan start to grow.

We have the Federal Food and

Drug and Cosmetic Act coming on in 1979, basically toughening up the FDA.

We have sulfa drugs discovered.

This is major to create and treat conditions like pneumonia.

This is actually going to be a radical thing to eventually get rid

of tuberculosis, which is the major killer up until this point.

Moreso than lung cancer or anything else in the United States at this point.

And we have our second attempt at national health insurance through the New Deal

legislation of Franklin Roosevelt.

The 1940s through the 50s is also a very dynamic time.

World War II really sets the stage for so

many things that happened going forward in the 20th century for American medicine.

Versus the development and use of antibiotics like penicillin and

the mass production of penicillin that's happened as part of World War II.

That's a huge issue.

It has great consequences going forward.

Hill-Burton Act of 1946 basically goes and puts a tremendous

amount of capital into the construction of hospitals and nursing homes.

Throughout the United States.

And mostly because a lot of the facilities were older,

they were under-capitalized because of the depression.

And really pretty disease ridden, honestly.

And so really, major transformation went on at that point.

We also have the proliferation of what will become a major tax subsidy.

Really to many people across the United States.

The proliferation of employer-sponsored health insurance,

this happens in World War II, it actually happens in 1943.

There is a recession that is actually occurring during the war and

part of it is because basically workers are not

being permitted by the government to get additional wages to keep cost down.

The employers and unions asks essentially for

instead to give out this new fangled health insurance thing to their employees,

but they don't want them to pay taxes on it and they want to retain

the good workers that build these planes and ships and everything else.

So this is actually approved and later becomes today

a 260 billion dollar a year Subsidy, we'll talk more about that later.

McCarran-Ferguson Act starts up here.

This is essentially not just for health insurance but

it basically says an insurance has to be sold on a state or regional level.

It cannot be sold across state lines.

The veterans administration starts to grow dramatically,

mostly because the consequence of World War II, and vets coming home.

we have our third attempt in the Truman administration for

National Health Insurance legislation.

Probably the closest it's ever come but yet it fails.

This concludes this module on

the healthcare marketplace evolution in module one.

1.2.1 Market Evolution: Pre-World War II

Healthcare Marketplace

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