The Evolution of Health Care Economics

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Vanderbilt University
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1965 Social Security Amendments of 1965 Enact of the Medicare bill. President Johnson Lyndons administration made improvements on the social security agenda by implementing a health insurance policy for the old aged people. During Johnsons era, heath care costs were increasing greatly for the elderly as their income reduced with time. Before the Medicare, only a small number of the elderly had hospital insurance cover (Cohen, 1984). Some insurance institutions could also terminate the cover of the elderly with high-risk diseases that would require more funding. The Medicare plan was made up of two main health insurance agendas for the elderly of 65 years and above. These were; a hospital insurance arrangement that would ensure cover over hospital costs and health care (Cohen & Ball, 1965).

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1980s Evolution of managed care organizations Managed health care is prospected to have evolved as early as 1929 by Shadid Michael who founded a farmers health cooperative. Then were the development of prepaid health agendas between 1930 and 1960. In the 1970s a bill on Health Maintenance Organization Act was passed to manage the then high costs of healthcare. This was followed by the opening of numerous outpatient clinics that paralyzed most hospital surgeries. Then in the 1980s, due to the fluctuation in healthcare costs, hospital reimbursement costs were capped. Between the 80s and 90s managed care initiatives were allowed to curtail t he high health related costs (Fox, & Kongstvedt, 2015).

1990s-present Increase in the aging population The healthcare budget tripled from over $80 billion to about $290 billion between the late 70s and the early 80s. The cost was expected to rise even higher were changes not made early. The aging population was projected to have increased four times since 1971 and more government expenditure were being directed to this group. Programs were put in place to lower the expenditures in the 90s so as to enable the government to fund other health care beneficiaries (Mendelson, & Schwartz, 1993).

1990s-present Increased use of technology in health care Expenditures on health have been growing at a rapid age since 1971 at an annual rate of 2.5% quicker than the economy. Experts in healthcare have associated the rapid growth with the inclusion of medical technology from the early 1990s. Cardiac care units were introduced in the 70s, as well as, beta blocks and lidocaine. Then later blood thinning agents were put in place, angioplasty and improved beta blockers. By 1990, more reliable drugs had been included in the sector and stents that opened blood vessels. The improvement in technology and equipment, however, consumed most of the government funding leading to a surge in the sector (Gambrellac, 2010).

2010 Affordable Care Act In 2010, President Obama signed the overhaul healthcare reform named Patient Protection and Affordable Care Act to become law. The Act requires all medical practitioners and hospitals to change their practices clinically, technologically and financially for improved healthcare results. The Act covers improved health affordability and insurance and reducing the number of uninsured Americans (Kline, & Walthall, 2010).


Cohen, J. W., & Ball, R. M. (1965). Social Security Amendments of 1965: Summary and Legislative History. Bulletin.

Cohen, W., H. (1984). Medicare: 1965-1985-2000. Speech at Conference on Medicare: Reaffirming the vision, retooling the instrument, Woodrow Wilson School of Public and International Affairs, Princeton University. November.

Fox, D. P., & Kongstvedt, R. P. (2015). A History of Managed Healthcare and Health Insurance in the United States*. FACP.

Gambrellac, A. P. (2010). Technological Change and the Growth of Health Care Spending. New York, NY: Nova Science Publ.

Kline, J. A., & Walthall, J. D. (2010). Patient Protection and Affordable Care Act of 2010: Summary, Analysis, and Opportunities for Advocacy for the Academic Emergency Physician. Academic Emergency Medicine, 17(7). doi:10.1111/j.1553-2712.2010.00802.x

Mendelson, D. N., & Schwartz, W. B. (1993). Health Affairs: The effects of aging and population growth on health care costs. 12, no.1 119-125.

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