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

Washington State Medical                                     

Sometime in the 1980's, two major healthcare trend lines were broken.  For the first time, the number of members enrolled in private medical insurance including Washington State Medical Insurance covered thru employer sponsored medical insurance plans declined both in numbers and percentage terms.  Globalization of markets and industries were challenging the high cost structures of US based industries and the labor unions who worked in them.  The challenge of the globalization of markets, of free trade, where the low cost leader  gains market share and those with higher cost structures lose share continues till today. 

Labor unions, seeing the handwriting on the wall, began to understand  that to force companies to pay for labor costs sometimes 3 to 5 times higher than these same companies would pay overseas would in the long run decimate their labor membership.   Labor had to give back hard fought for Washington State medical benefits to save jobs.  With the economy burdened with very high interest rates and due to the recessionary climate in the early 1980's, labor was in no position to demand for better benefits and salaries.

Later in the decade, once the economy was growing again, big labor made it their primary goal to win back benefit concessions given up earlier.  The greatest reason why unions went out on strike during the 80's and early 1990's was over health plan benefits.

Workers who were layed off during the 1980's recessions, found out later that many of the companies who were willing to hire them back had much skinnier medical insurance benefits.  In many cases, the employers would pay for only the employee and not his or her dependents.  Employees, who were barely able to make ends meet, couldn't afford to pay the stiff medical insurance premiums required to cover the dependents either and so the rolls of the uninsured grew.  
As the numbers of uninsured increased, more and more people were calling for a national medical care plan that included Washington State.  Although during the Reagan years, the economy improved with growing number of jobs available, many of these were without formal medical insurance plans. Most of these new jobs were created in small service companies without the long list of expensive benefits that the old steel and auto industries had.

Private insurers during this time learned from the government and began getting bids from contractors who could provide services and products at fixed prices.  Member patients had to use these contractors in the new PPO systems or be penalized by going outside the network with higher deductibles, co-insurance rates and higher out of pocket amounts. PPO's grew tremendously during this time and became much more acceptable to workers than health maintenance organizations (HMO's).  PPO's provided greater freedom such as being able to go directly to specialists without a referral from a primary care provider as required by HMO plans. PPOs, however, do not control costs as well as the HMO model.  Up till the start of the new millenium or so, HMO's were very popular especially among employers.  HMO's were doing well in controlling costs, and plans were very generous in terms of small or non existing deductibles  and lower out of pocket maximums.  

At the same time as Washington state medical insurance coverage and benefits were changing in the late 70's and 80's, hospital systems were going thru their own metamorphosis.  For profit hospital systems were taking over the industry as these systems, well funded thru capital from the stock market as well as private equity funding, grew dramatically.  Some of these systems grew to hundreds of facilities spread over multiple number of states.  Predictions were rampant that one day, there would be an oligopoly type structure of hospital ownership where a few dominant players would control the hospital systems in our nation. This was a dramatic turn from the small, locally operated non profit community based hospitals that were commonly known and appreciated across the land.

Some hospitals tried to gain control of their destinies by creating wholly owned health insurance companies to try to avoid the painful pressure from various insurance companies who were constantly pushing for greater efficiency and lower costs. Most of these systems did not pan out and the entire for profit hospital movement has slowed dramatically. Still, up thru the start of the millenium, hospital mergers and acquisitions were popular and some of these systems entered into various types of managed care themselves   O

As one looks back on the 1990's, the most significant event was Hillary Clinton's attempts to nationalize health care. Though it failed, it put the insurance industry on alert.  These firms began to think outside the box and to come up with strategies to survive in case national health insurance became a reality.  In Massachusetts, they are now experimenting with some aspects of the Clinton plan.  Bottom line, as this country moves ahead with increasing numbers of uninsured, there will be political capital spent on getting some form of national healthcare done.  The question is how much of the private sector  will still be involved and how much the government will take over the creation, the marketing and the delivery of healthcare services