This is Healthcare Marketplace Specialization, Healthcare Marketplace Overview. I'm Steve Parente and this is module 3.2.3 major points in inflection of the health insurance market. So, we mean points of inflection as we talked about before in the [INAUDIBLE] market, these are major events that occur across the decades. And quite a lot of things occur starting from the creation of Blue Cross Blue Shield in the 1920s and into the 30s. And also Kaiser Permanente coming online in that same era as well. The big thing happening in World War Two was the creation of insurance products as essentially employer substitutes for wages. And this is a huge deal. Because prior to this, the thought was you work for a job, you get your wages, you're done. You get some benefits maybe, some sick time, maybe a vacation day, two, three, but here because of a wage freeze that was imposed by the federal government in 1942. The employers of the day and labor unions asked federal government to say, can we offer health insurance as a non-taxed to the employee benefit, meaning that the employee would get this as a substitute for wages, because wages were essentially were told to be flat. They couldn't increase them and the reason why they did this is that they, even though, we're all going to war, and we're building things, you still need someone to actually go into the factories and build these bombers and tanks and such. And there was a competition for labor, this was a good way to actually move this forward in a recession period. So, the U.S. government agreed to that and that created what essentially will later become flash forward to say 2016, a roughly 250 billion would be subsidy that now goes to workers, we'll come back to that later. In 1945, we also have the McCarran Ferguson Act. Those of you who have visited Las Vegas. You might have landed in McCarran Airport, same idea, it's for a senator. And the McCarran Ferguson act basically said that if you wanted to purchase insurance across state lines. Let's say, we have Nevada on the one side. And then, we have say Colorado is sort of somewhat adjacent to it. That's not going to happen. Basically, you can only buy insurance in one state, you can't buy it from the other state even if you moved away. The reason why that was done in part was not so much health insurance, it was done because it was hard to, the thought was in 1945 hard to administrate claims over long distances. There was a Supreme Court decision that later, in 1944, that inspired McCarran Ferguson. But it also means that, there are lots of regulations that are state specific about the governments of health insurance that can raise premiums by 20, 30, 40%. When we go forward into the market, we get to of course, Medicare, which starts in 1966, which is a major innovation, in terms of offering coverage. In 1974, we have the HMO act, also in 1966, or at least 67, we have Medicaid for the poor. Each of those start actually as a term that's coined in Minnesota, the idea of health maintenance organizations. And they're really like Kaiser-Permanente evolved. But the difference was that they got federal dollars to actually create incentives for physicians and hospitals to set up their own versions of Kaiser Permanente across the US. One of the largest health insurers on the planet right now, United Health Group, starts up as one of these demonstrations as it grows and acquires different plans over a period of time. Another major thing that occurs is this idea of ERISA, which stands for the Employee Retirement Income Security Act. What that allows for is the employers, major employers to basically offer their own workers health insurance where they would actually self-insure, meaning that they would not necessarily buy a Health policy from a BlueCross/BlueShield for you that would actually use their own cash to pay for services, they still use BlueCross/BlueShield or United Healthcare to give you a card but then, it would collect a sort of fee on every transaction that would actually be used, maybe only 5% to 10% as administrative cost, but otherwise, the company would literally pay for your medical care out of its reserves. That means if the company goes bankrupt, basically, you don't have any health insurance policy. The major provision in health insurance to do this is also associated with 401Ks, people understand how that world works. And then, the other thing that happened that's a major issue in 1983 is the idea of what Medicare does. Medicare decides to move off the idea of cost-plus, so that cost-plus world where they just paid whatever charges came through, they got rid of that for hospitals and started paying on a fixed fee basis for the type of medical mission that you actually have. Then, as we get more into the modern era here in 1992, what we have is that now for the physicians, Medicare does the same thing. They put in a fee schedule for Medicare. And that's schedule actually gets used in by all the private insurers going forward. So, it's not just Medicare that goes beyond that. In 1990s, we find that, if you have AIDS, if you have mental heath, if you have even diabetes, asthma. Different diseases were being carved off for specialized medical attention and they become what's known as disease management companies to focus on that. The other thing that happens as well is that prescription drugs, which really started taking off in the 90s because they are far more effective. Prozac nation basically starts in the 90s. Prescription drugs essentially get their own separate coverage that becomes much more extensive in that era. And then by 1996, what we have is medical savings accounts, the beginnings of HSAs. And high-deductible plans starts in this era. And this is actually sort of a blowback from some of the health reform initiatives from the Clinton administration that didn't work. Not quite as well as people were expecting. What else happened? Well, as we go forward into 2001, this is when the beginning of these HSAs, which stands for Health Savings Accounts, really get going. They get formally introduced and passed in 2003. Also Medicare, which only really covered doctor visits and hospital services, adds prescription drugs to the benefits that it has on offer, which has been common for most of the benefits prior to that. Other major things are that, by the time we get to 2006, the HSA's are growing much bigger than they were previously and that actually for first time ever seniors now have a medicare drug coverage which they've been looking for, for at least a decade and succeeded politically in pulling together. One in-video question, as we look at this whole evolution is how uniquely American is the evolution of the insurance market in the 20th century, and can you name three unique historic moments, not just in healthcare but just happening in general that uniquely shaped the insurance market by 2015. This concludes this module.
