Economic Terms and Health Care History


Health care has evolved over the last ten decades, changing economic and political terrains in different countries. The United States health care system is an example of such evolution. The effect of World war I and II contributed to the financial and intellectual issues in the health care system. Economists analyzed the intellectual and financial issues related to health care economics. The financial and intellectual resources of the health care system in the US have encountered many challenges (Arrow, 2008). The challenge is influenced by the increased cost of the resources. The health care changes in the US started from a client and a physician to an arranged and computerized system of operation involving different countries. The evolution was influenced by the change in arrangement gathered under the name called manage care. To date, health care economics in the US is developing. Most changes in the health care reform are copied using different techniques and operations in other developed countries (Arrow, 2008). Health care economics identifies two major players; the individual and the organization

The history of health care

The end of the Second World War led to teform in the health sector. Health care reform went through a revolution, which influenced the knowledge for diagnosing and treatment of illness. Some years ago, physicians could not do better than diagnosing, their activities being was mainly the identification and cause of a particular ailment, guide the family on how to manage the illness and allow the illness take its full course.

History of health care economics

Between 1950s and 1960, health care economics penetrated health issues. Health economics exists within the economics of education and other applied fields. Both aspects of education use human capital theory. A coalition of health care consensus groups and organization posed different opinion to health care economics. It has some guiding principle for reform and change. Different studies canvassed possible ways of funding the health care system. Milton Friedman studied health care economics between 1929 and 1936. He focused on the inequality among medical professionals and the quality of services rendered. By 1958, Selma Mushkin studied the financial problems associated with health insurance scheme. She argued that health investment guarantees growth in the economy. Grossman expanded the argument in 1972. He accepted Mushkin’s argument on health care economics. His observation influenced the general acceptance of health care investment (Lindhert, 2006). An accepted assessment scale was introduced. It consists of eight important features regarding patient, third-party payers and providers of health care.

Assessment of the eight key features

  1. Price satisfaction: To ascertain if individuals are enjoying the benefit for the money paid. To measure the benefit with the money paid, individuals would have to compare the price and service (Lindhert, 2006).
  2. How the poor benefit from the health care reform.
  3. Quality of care delivery: The reason for quality health services.
  4. Clinical anatomy: How does the system affect the professionals to act in the interest of their patient and if it encourages best practice?
  5. Consumer empowerment and patient satisfaction: How can the means of payment push the consumer into a weak or strong position?
  6. Responsiveness: What is the competence of health care providers in health care delivery?
  7. Fiscal competence: Balance payment with service delivery.
  8. Conflict of interest with the third-party payer: What kind of system balances a third party arrangement?

Timeline of health care funding

1900: Health care association became a professional organization wielding influence across local and national level. A health insurance scheme had little value.

1912: Legislators backed the health insurance scheme. The scheme suffered major setback because of World War 1.

1929: Baylor hospital introduced the first model of a health insurance scheme. The insurance scheme became the starting point of the evolutional change.

1932: The depression in the US shifted focus from health insurance to social insurance. The bill for social insurance was passed into law while the health care policy was ignored. Health care economics was analyzed using financial and intellectual resources. Medical associations opposed the health care insurance scheme citing interference to privacy.

1944: The bill of rights was enacted. The right to proper health care was a major component in the bill of rights.

1945: The health insurance scheme was condemned the medical profession.

1946: Medical care is a right for all citizens. The government enacted a policy called the Hill-Burton Act. The law prohibits racial, religious, and national discrimination.

1965: Medicare signed into law. The law covers health care delivery for the aged and the disabled.

1970: Witnessed prolonged health care crisis. The water gate problem reduced the belief in the health care insurance scheme. The cost of health care services increased throughout the country.

1980: Privatization of the health care system transformed Medicare. Corporations injected funds through the health care insurance scheme.

2006: State governments obtained the permission to enact health reforms. Health care providers made provision for the uninsured citizens.

2010: Health care reform was evaluated and signed into law. This program guarantees health care service for all citizens.


Arrow, K. (2008). Uncertainty and the welfare economics of medical care. Boston, USA: American Economic Review.

Lindhert, P. (2006). Growing public: Health care economics. London, England: Cambridge University Press.

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