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Press Enterprise (Riverside, CA)


February 15, 2004

Today's health-insurance system and cost crisis have their roots in practices and reform efforts dating back to the 1900s.

Here are some milestones from the past half-century:


* The cost of hospital care doubles during this decade.

* The U.S. health-care system offers private medical insurance for people able to afford it. The federal government takes responsibility for the needy who are sick.


* The growing popularity of private health plans makes the concept of national health insurance seem less likely.

* The federal government, concerned about shortages of doctors and other medical staff, adopts measures to expand education in health fields.

* President Johnson signs Medicare and Medicaid into law in 1965.


* President Nixon renames private, prepaid group health-care plans as health-maintenance organizations, or HMOs.

* U.S. medicine enters a crisis stage. Health-care costs climb quickly, fueled by Medicare expenses, inflation, growth of hospital fees and profits, and changing practices, such as more use of drugs and high-tech equipment.


* The nation shifts toward privatizing and incorporating the health-care industry. Decentralized hospitals are increasingly integrated into corporate chains. Private enterprise also consolidates other businesses related to health care.

* More and more insurers complain that doctors are exploiting the traditional fee-for-service (indemnity) mode of payment. As a result, "capitation," or fixed, payments to physicians become more common.


* Health-care costs soar at double the inflation rate. Growth of managed care helps moderate prices until the mid-1990s.

* The Health Insurance Portability and Accountability Act of 1996 (HIPAA) establishes privacy provisions, health-insurance reforms, ways to simplify administrative processes and a new Medicare Integrity Program.

* California's Healthy Families Program, which subsidizes care for low-income children, is approved in 1997.

* In 2000, California establishes a Department of Managed Health Care, a first-in-the-nation project that helps people resolve gripes with HMOs. The agency's clout includes the power to fine HMOs and take over management of those that flounder.

* By 2001, Medicare and Medicaid together account for 32 percent of all health-care expenditures in the United States. Some speculate that Medicare is unsustainable and must be rescued.

* In October 2003, Gov. Davis signs SB-2 into law, requiring businesses with 200 or more employees to provide health coverage - and pay 80 percent of premiums by January 2006. Companies with as few as 20 employees must comply by 2007.

* On Dec. 8, 2003, George W. Bush signs a Medicare reform bill. It includes a controversial prescription-drug benefit for seniors.

Sources: Jim Lott, Hospital Association of Southern California; Encyclopedia; Managed Care Magazine; Public Broadcasting Service; and Foundation for Taxpayer & Consumer Rights.