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History of US Health Care

The US health care system was created by accident. When other countries moved to government health care ("single payer") starting in the 1930's, companies, insurers and doctors resisted such efforts in the US. But selling health insurance to individuals was not profitable unless the premiums were very high because only those with medical problems wanted to buy it (called "adverse selection"), driving up the costs, making it less attractive to the healthy, in a vicious cycle. If a group buys it, a profit can be made if most people in the group are healthy. Companies were reluctant to take on this expense until the World War II wage restriction laws, which exempted benefits. Companies began to compete for scarce labor by offering benefits such as health insurance.

With advances in medicine, health care became more expensive. Those who didn't work for companies with health insurance couldn't afford it, and when people retired, they were no longer covered, financially ruining many retired people. The government stepped in with Medicare (for the old) and Medicaid (for the poor). The costs of Medicare and Medicaid were ballooning out of control until cost restrictions and limitations were imposed, such as not covering drugs (until recently). HMOs controlled costs briefly, but often by red tape. Now the government is running a huge deficit, HMO costs are growing again and private companies are dropping health care or requiring larger employee contributions. Health care costs are skyrocketing because of all the costly advances in medicine, and are about to be boosted by the aging of the baby boomers.