I haven’t yet found a good contrarian treatment of the history of modern health care. What little I know that goes against common wisdom has been pieced together from scattered sources. I don’t think that Jonathan Cohn’s upcoming book Sick: The Untold Story of America’s Health Care Crisis—and the People Who Pay the Price is what I’m looking for, but it at least seems to have looked into the origins of 20th century health “coverage, according to this review in Slate magazine:
What we recognize as modern medicine, Cohn writes, began in the 1920s. That’s when doctors and hospitals, having only during the previous decade learned enough about disease that they could be reliably helpful in treating sick people, began charging more than most individuals could easily pay. To close this gap, which worsened with the advent of the Great Depression, the administrator of Baylor Hospital in Dallas created a system that caught on elsewhere and eventually evolved into Blue Cross. The Blues were essentially nonprofit health insurers who served local community organizations like the Elks. In exchange for a tax break, Blue Cross organizations kept premiums reasonably low.
The success of the Blues persuaded commercial insurers, who initially considered medicine an unpromising market, to enter the field. Private insurers accelerated these efforts in the 1940s when businesses, seeking ways to get around wartime wage controls, began to compete for labor by offering health insurance. If government regulators had thought to freeze fringe benefits along with wages, we might have avoided making the workplace primarily responsible for supplying health insurance, a role that most people now agree was ill-advised. Instead, the government jumped on the bandwagon by exempting from the income tax company expenses associated with health care. […]
The Blues, in their early days, charged everyone the same premium, regardless of age, sex, or pre-existing conditions. This was partly because the Blues were quasi-philanthropic organizations, Cohn explains, and partly because the Blues were created by hospitals and therefore interested mainly in signing up potential hospital patients. They were sufficiently benevolent that when Harry Truman proposed a national health-care scheme, opponents were able to defeat it by arguing that the nonprofit sector had the problem well in hand. As private insurers entered the market, however, they rejiggered premiums by calculating relative risk, and avoided the riskiest potential customers altogether. To survive, the Blues followed suit; today, they no longer enjoy a tax advantage and are virtually indistinguishable from other health insurers. Meanwhile, large companies, which tend to employ significantly more young people than old people, began to self-insure. The combined result was that people who really needed health care had an increasingly difficult time affording, or even getting, health-care insurance.
I knew the part about how businesses became health coverage providers, but not about the origins of Blue Cross and Blue Shield. I doubt that Cohn’s book will teach me much about possible alternatives to the current mess (he seems to be advocating at least a government-enforced single payer system, if not full-blown socialized medicine) but I expect that he will have lots of good specifics about how the current system is broken, and his emphasis on historical development is promising.