Managed Care: Where Did It Come From? What Does It Do? How Does It Survive? What Can Be Done About It?

In America prior to the 1930s, it was considered prudent to put aside a portion of the family income to cover the cost of medical care. Those families decimated by major illnesses were viewed moralistically as improvident and the proper object of fiscal counseling.

During the depression in the early 1930s, it become increasingly evident that only the wealthy could ensure the availability of a sufficiency of funds to cover the costs of severe or catastrophic illnesses.

The American Hospital Association (AHA) as early as 1927, had as its goal “the provision of hospitalization for the patient of moderate means, consisting of 80% of the entire population.” Hospitalization plans, it was indicated by the AHA, which was the primary funder of what was to become Blue Cross/Blue Shield, should be available “for all persons regardless of their ability to pay” and were designed to reach those employed at “low incomes who would otherwise require the aid of philanthropy or taxation” (Law, 1974). (Currently, the Republican leader of the House of Representatives and his disciples want to remove the floor of suffering, misery, and degradation below which we would previously allow no American to fall and replace what Medicaid has provided with “philanthropy.”)

The hospitals were strong advocates for hospital insurance out of self-interest, as well as out of concern for the public, for they found that they, too, were suffering financially during the depression. For