History behind the U.S. health care crisis: How did we get here?

By Frank McGeorge - Reporter , Sarah Mayberry, M.P.H. - Producer

It's been a wild few weeks for a U.S. health care system many say is in crisis.

Proposals, rejections and now a delay in the vote on the Senate Republican plan have created a cloud of uncertainty around the future of medical services for millions of Americans. How did the country get here? Why is it all so complicated?

It happened one piece at a time, starting long ago.

Over a hundred years ago medical care was very basic and fairly inexpensive. The biggest "health" concern of the time related to dangerous working conditions. A single serious injury or illness to the main breadwinner in a family would send them into poverty. Early insurance, known as industrial injury and sickness funds, slowy sprouted up.

"Historically, insurance was designed to cover catastrophic things that would bankrupt you effectively if you ran into them," said Marianne Udow-Phillips, director of the Center for Healthcare Research and Transformation at the University of Michigan.

"Every developed country in the world other than the United States is clear about how they've designed their health system. They actually have social policy where they have said this is how were going to deliver and finance health care. That is not true in America."

The compex system of coverage in America evolved. It was never thoughtfully designed, mainly because we've never answered the question of whether health care is a right, a product to be bought and sold, or an essential government service like roads, education, or police and fire services.

America was driven in different directions at different times.

At the turn of the century medical science became more developed, but also more expensive. That spurred interest in broader nationalized health coverage, but the movement was stifled by events in American history. Early problems came from seemingly unlikely places. For example,  during World War I there was furious anti-German sentiment, and the nationalized health care system Germany had adopted was considered anti-American.

The Great Depression moved the needle in favor of privatized health insurance.  Hospitals needed to attract patients, so they developed plans where, for a small monthly fee, short-term hospitalization would be covered. This was ultimately the birth of Blue Cross.

Physicians and the American Medical Association initially opposed both nationalized health care and even private insurance. But as hospital-based Blue Cross plans grew, physicians and the AMA developed their own pre-paid insurance service to cover their services. This became known as ''Blue Shield".  The private commercial health insurance model proved to be lucrative, and,  in time, they would merge into what we know today as "Blue Cross and Blue Shield."

World War II moved the U.S. even more toward private insurance, and specifically employer sponsored plans -- linking health insurance to employment. Here's how it happened -- the war caused caused the government to limit wage increases -- with one loophole -- employers could compete for workers by offering health insurance as a fringe benefit.

"So insurance and employer-sponsored insurance was really developed in that period of time in the 1940s because employers could use it as a benefit to atttract a workforce so we saw a huge growth in employment sponsored insurance in the 1940s and WWII," Udow-Phillips said.

She pointed out employment-sponsored health coverage created other problems.

"That meant we left out a whole bunch of people. We left out seniors, they didnt work, and we left out people in poverty so in the 1960s we developed measures to cover some of those people. Medicare for seniors and medicaid for some people in poverty and so that made it a very complicated system."

Since the 1960's, both Medicaid and Medicare have been stretched to cover even more people.

The Patient Protection and Affordable Care Act, also known as the Affordable Care Act or "Obamacare," grew the ranks of the insured, but failed to address other issues.

At every opportunity to startover with health care, the country has elected to make smaller changes instead.

And that's created the complex puzzle facing the U.S. today.

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