Everybody experiences the financial stresses of health care costs, but many do not understand why costs are so high or what to do about it. Even when people do have insurance, the costs or premiums, deductibles and co-pays can and do create financial nightmares.

The History of Insurance

Insurance ultimately began when a group of Dallas, Texas teachers paid a hospital for room, board and medical treatment in 1929. Before this, medical care took place in home, and the doctor would charge a nominal fee or work out an acceptable barter. As information about diseases and medications became more advanced, the cost of services began to rise. Most doctors also could not afford the necessary equipment, so hospitals began to play a larger role in medical care.

The Evolution of Health Care

As medical care grew more sophisticated and effective, more people turned to its services. Doctor’s relied on Blue Cross insurance to protect both their payments and their interests. With the advent of success enjoyed by Blue Cross and Blue Shield more insurance companies sprang up, offering competitive prices and various services. After the Great Depression the country started to repair and restore itself which led to an era of prosperity and a competitive job market. In order for a company to appear more appealing to a worker, places of employment started offering health insurance to their workers. This quickly became the norm rather than the exception.

The Continued Rise of Health Care Costs

In 1968 Lyndon Johnson launched an ambitious project he entitled the Great Society which included Medicare. Although the concept is admirable, it served as a further catalyst for the skyrocketing costs we see today. When hospitals, pharmaceutical companies and doctors know they have a guaranteed payment, there is no reason for the prices to stay competitive. The same holds true for insurance companies, they have to charge enough to meet these high costs and the expense passed on to their clientele.

In order to eliminate much of the inflated costs related to health care, competition is an absolute necessity. Competition brings prices down while causing the performance level to go up, meaning cheaper but better care for everyone involved.