Starting in the 1930’s, the American Medical Association (AMA) reluctantly agreed to accept a health insurance model because they feared the federal government would overreach into the health care sphere. They decided that the best way to protect themselves was to have only the insurers finance health insurance. A huge component of this was that every physician would be paid for each service they provided during a patients’ visit. Essentially, the AMA drove health care costs up by incentivizing physicians to provide any relevant tests because they would be paid for every service during each appointment. To the physician, they were charging a faceless third party somewhere, for each service, rather than thinking they are charging their patients for each service. Therefore, costs were already a huge problem before Medicare passed in the 1965. Today, we have to look at how hospitals and doctors are incentivized in order to analyze our overall health care system. Essentially, the AMA enabled government intervention in the health care system, when they originally agreed upon the creation of a health insurance market to prevent government interference.

When was the discovery of germ theory and how did it change the sphere of health care? How did the American Medical Association increase the professionalization of doctors? Are we rationing health care or are we over-providing it? What percentage of the GDP does the U.S. spend on health care? Do we demand more out of health insurance than insurance can handle?

Further Reading:

Ensuring America’s Health: The Public Creation of the Corporate Health Care System, written by Christy Ford Chapin

The History of Germ Theory, written by Jemima Hodkinson

How does health spending in the U.S. compare to other countries?, by Bradley Sawyer and Cynthia Cox

President Johnson signs Medicare bill on July 30, 1965, written by Andrew Glass

Related Content:

Health Care without Health Insurance, Building Tomorrow Podcast

Why Can’t You Email Your Doctor, Free Thoughts Podcast

How to Fix Health Care, Free Thoughts Podcast

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