CHAPTER 3
The Evolution of Health Services in the United States
Professionalization of medicine started later in the United States than Western Europe. Reasons
include the following:
2. American cultural attitudes—self-reliance, home remedies, and familial care
PREINDUSTRIAL ERA—1700s TO LATE 1800s
Characterized by medicine as a domestic rather than a professional institution
No health insurance to pay for professional services—free market conditions prevailed
Characteristics of medical care delivery:
1. Medical practice in disarray
• Unorganized trade (not a profession)—free entry, intense competition
3. Missing institutional core
• Institutions fulfilled a charity and welfare rather than a healthcare function
4. Unstable demand for medical services
5. Substandard medical education
• Training through apprenticeship under poorly-trained preceptors
POSTINDUSTRIAL ERA—LATE 1800s TO MID 1900s
Characterized by professional sovereignty
Factors that transformed medicine:
1. Urbanization
• People were distanced from their families
2. Science and technology
Bacteriology, antiseptic techniques, anesthesia, diagnostic equipment, new drugs
3. Institutionalization
• Modern hospital provided an institutional core
4. Dependency
• The society’s expectations of the sick to seek medical care and get well
5. Autonomy and organization
• Specialization, educational reform, and professionalization led to the need for patient
6. Licensing
7. Educational reform
• Harvard and Johns Hopkins took the lead
• Laboratory instruction and science
Specialization in Medicine
58% of American physicians are specialists
Community Mental Health
National Mental Health Act provided funding for psychiatric education and research
NIMH was established in 1949 – championed early treatment of mental disorders
Development of Public Health
Urbanization increased concerns about protecting the health of populations as deadly outbreaks
of communicable diseases became common. Most states created public health departments by
– Maternity and child welfare
– School health screening
– Family planning
– Substance abuse and mental health
Organized medicine kept private practice separated from public health for fear that it would
Health Services for Veterans
The Department of Veterans Affairs (formerly Veterans Administration) built its own hospitals,
outpatient clinics, and nursing homes.
Birth of Workers’ Compensation
– Originally, paid cash for wages lost due to job-related injuries and disease
Rise of Private Health Insurance
Three forces led to the need for health insurance in America.
1. Technological—advanced treatments that were desirable but expensive
3. Economic—risk of catastrophic loss
– Early blanket policies combined life insurance, accidents and sickness, and nursing services.
– The Great Depression provided the impetus for private health insurance. People as well as
institutions needed economic protection. The Baylor Plan (1929) introduced the concept of
hospital insurance, a prepaid plan based on capitation. This led to the creation of Blue Cross.
Failure of National Health Care Initiatives
Compulsory sickness insurance took hold in Europe. Main reasons:
• To pacify labor unrest that threatened political stability
In the United States:
• 1917—The American Association of Labor Legislation attempted to expand its social
agenda by advocating national health insurance.
• 1935—Franklin Roosevelt era, New Deal (Social Security passed)
• 1940s—Proposed bills during Roosevelt’s presidency failed to pass. Truman became the
Creation of Medicare and Medicaid
• Private health insurance for the middle-class
• Many of the elderly, the unemployed, and the poor had to rely on their own resources, on
• Tax supported programs for the elderly and poor were successful because they were viewed as
charity for vulnerable populations:
– Rising costs of health care that these groups could not generally afford
– Poorer health status compared to general population
– Part B—government subsidized insurance for outpatient services
The program was initially created for the elderly, but was later expanded to include the
disabled on Social Security and people with end-stage renal disease.
Regulatory Role of Public Health Agencies
When government provides financing for health care, its regulatory powers over the private
sector also increase.
Prototypes of Managed Care
Contract practice
• Direct contracting with industry in remote areas, use of salary or capitation
MEDICAL CARE IN THE CORPORATE ERA
1. Corporatization
Medical care has become the domain of large corporations
– Managed care has become the primary vehicle for insurance and delivery
o Consolidation of purchasing power on the demand side
– Integrated health care organizations
o To counteract managed care’s power
o Hospitals expanded services in other areas (outpatient services, long-term
2. Information revolution
Use of telecommunications, information technology, and informatics has become indispensable
in clinical care, education, and research. Computer-based medical IT was first developed in the
3. Globalization
– Cross-border activities (information exchange, goods and services, interdependence
of economies)
– Telemedicine
– Receiving health care abroad
– Foreign direct investment in health care enterprises
ERA OF HEALTH CARE REFORM
• A still-evolving phase.
• In March 2010, the ACA was passed by the Democrats.