The great depression was a rough time for many, and this didn’t exclude hospitals and physicians. 1929 was the start of many financial downfalls. People couldn’t afford to pay medical bills which caused admission rates to plummet. This lack of income for physicians and hospitals brought on experiments with health insurance. The birth of Blue cross was from one of these experiments brought to light by Baylor. According to Sultz and Young (2018), “The Baylor University Hospital plan was not the first, but it became the most influential of those insurance experiments. By enrolling 1,250 public school teachers at 50 cents a month for a guaranteed 21 days of hospital care, Baylor created the model for, and is credited with the genesis of, Blue Cross hospital insurance.”(P.24) These experiments grew into plans that were put to action. The American people needed something to help them with the costs. According to  Sultz & Young (2018) this was delivered, “By 1937, there were 26 plans with more than 600,000 members, and the American Hospital Association began approving the plans.”(P.24) The AMA still didn’t support this push for healthcare. This is when government intervention started, which the AMA supported.

The ever-growing influence of government on healthcare

Healthcare costs continued to rise, and it wasn’t completely caused by insurance companies. The government’s influence and role in coverage of health care for special populations shares a portion of the blame. “In 1935, by granting federal aid to the states for public health and welfare assistance, maternal and child health, and children with disabilities services, the Social Security Act became the most significant social policy ever passed by any Congress.” (Sultz & Young,2018, P.25) This as well as the Health Professions Educational Assistance Act of 1963 and the Nurse Training Act helped to pave the way to what was to happen next. Medicaid and Medicare were signed into action by President Lyndon B. Johnson on July 30, 1965. These plans covered older adults and low-income families. This would change in later years to cover more of the population in need. The government supported and was involved in many programs through the years. The need for assistance grew as the cost of healthcare continued to rise. This caused insurance premiums to rise with lack of control over physician and hospitals costs.  “Over the years, the U.S. government developed, revised, and otherwise adjusted a host of categorical or disease-specific programs designed to address needs not otherwise met by state or local administrations or the private sector. Today, federally sponsored programs account for about 43 percent of U.S. personal healthcare expenditures.” (Sultz & Young, 2018, P.26) The introduction of block grants began an era labeled as “New Federalism”. In 1970, President Nixon wanted to make a shift in the federal government’s direct influence within healthcare programs. He had a vision of using these block grants to let the states utilize at their discretion funds that were utilized for specific programs. This would give the states and local government more control and say to where the money went and how it was used.

While the government was trying to make healthcare more affordable, they were contributing to the constant growth in how much healthcare cost. The programs set in place brought healthcare to many who couldn’t afford it, while at the same time causing a tremendous expenditure. According toSultz and Young (2018), “In the mid-1960s, when Medicare and Medicaid were passed, the United States was spending about $42 billion on health care, or approximately 8.4 percent of the gross domestic product. The costs of U.S. health care now exceed $3 trillion and consume more than 17 percent of the gross domestic product.”(P.26)  While costs had grown astronomically there was another notable attempt at controlling them during the Reagan Administration. Diagnosis-related groups or DRGs was brought forth during the 80s to encourage physicians and healthcare facilities to utilize their resources efficiently. The implementation of the Medicare prospective payment system in hospitals caused a shift from what Sultz and Young (2018) calls “a fee-for-service retrospective mode to a pre-paid prospective mode.”(P.28) Rather than charging for the service they were to charge per diagnoses. According to Sultz and Young (2018) the Reagan Administration also tried to control costs by, “the administration also created a new payment method, the resource-based relative value scale (RBRVS) to make physician payments equitable across various types of service, specialties, and geographic locations.”(P.28 ) This wasn’t the end of the government trying to regulate costs within the healthcare system. In 1997 with the introduction of the Balanced Budget Act, the government took steps in reducing costs and balancing the budget. While cost was being addressed there was now a concern for quality and access. With coverage being made for the low-income population, this was causing a cost shift for those with other insurance. This combined with hospitals and physicians doing their own thing and interpreting the regulations loosely has caused quality and access to become an issue.