Robert S. Mori, CPA, President   7429 East Heather Way, Everett, WA  98203-5424

Health Insurance WA                                     

(Continued from WA State Medical Insurance)

At the start of the 1970's health costs and therefore health  insurance costs in WA state and the USA as a whole, become a major thorn in the side of both the private and government sectors of the economy.  Yet no major change occurred in the trend of ever increasing benefits and not only the level of benefits but also the latest and most costly technology and advancements became included in the benefit profile of both sectors as they covered their respective employees. Then the Medicare administration decided to grant coverage to those suffering from end stage renal disease during this time.  Treating this  disease is very expensive and this added fuel to the fire of inflation and escalating costs in the medical care sector. Covering the latest and greatest treatments for this and every other covered condition pressured the WA state health system with greater required reimbursements and overall costs. This pattern has continued for over 35 years until today.  

After Medicare and Medicaid were authorized there were those who believed that national health insurance would soon become a reality for all Americans including all citizens of WA state.  Early in the decade of the 1970's there were calls from many quarters for unrestricted coverage however, there never was a broad consensus on how this would be accomplished.  Many proposals were talked about on the floors of the US Congress but there was insufficient support from the general public to push thru legislation. During that era, there were many other issues that required the attention of Congress  including Viet Nam, civil rights, pro abortion decisions, and Richard Nixon and Watergate.  this latter issue, along with Vietnam made the public distrustful of big government thus no national medical insurance was enacted in WA DC.  

HMO's were developed and brought to market in the early 1970's.   Believers thought they would be able to brings health insurance costs under control. In the real world, stakeholders, including doctors, hospitals, patients, employers and other consumers weren't willing to change from the traditional fee for service plans because of their conform with such plans and their concerns about managed care plans. With the passage of the HMO Act, Congress legitimized these new type of plans but still they were slow to catch on.  During the 1970's governments tried numerous times to get health care costs under control.  The Employee Retirement Income Security Act of 1974 (ERISA) introduced vesting requirements for pensions and provided protection (the ERISA "preemption") of qualified employee benefit plans against state efforts to regulate certain aspects of those programs. 

During the 1970's, many states began to require that certain benefits be attached to health insurance plans. Although benefits have continued to increase since then, all sorts of special interest groups have come out of the woodwork to cry out for more.  Doctors, Chiropractors, mental health specialists, naturopaths, special need victims wanted increased benefits or networks of providers be expanded Just a few examples include the mandating of maternity benefits, in vitro fertilization services for sterile couples; and services from Christian Science readers, chiropractors, and various medical or social workers other than traditional physicians.  At least one state even mandates payment for hair pieces when hair loss results from a specific disease or treatment.  These laws motivated many firms to drop commercial health insurance plans and self-insure their workers' benefits because the ERISA preemption protected self-insured workers' benefits because the ERISA preemption protected firms from state mandated requirements.  The law also protected them from having to pay insurance premium taxes. 

A series of federal laws relating to health planning also were enacted during the 1960's and 1970's.  Most of them had as at least one of their goals the attempt to slow down health care inflation.   No legislation has succeeded.

In 1976, President Carter took office in WA DC as the first president since Harry Truman with a public  commitment to national health insurance.  Shortly thereafter, Carter decided that there was no way national health insurance would work until health care costs were reigned in.  Government in Washington DC made attempts to stop this freight train, but their well meaning but weak efforts made little difference as the power of consumer wants, provider demands and a government of appeasement all combined to aggravate the high historical inflation rate for health care that is now history.

In the next decade of the 80's Congress tried to slow down the rising Medicare costs.  They instituted stricter limits on what costs were reimbursed but the big change was  a new methodology of paying claims called diagnostic related groups of services (DRG's).  What happened was that in effect, the government plans didn't reimburse the full cost of the services that their members received and so the providers such as hospitals and physicians shifted these costs onto the private sector by charging them more than their rightful share.  Employers were annoyed if not angered by these financial shenanigans and their view of a government run national health insurance plan grew dim.  If government can't manage the plans they already had efficiently and fairly what would happen if you gave government the responsibility of running the whole enchilada?  Smaller employer groups became less able to pay for benefit plans and so higher rates of the population became uninsured.