The Finance of Health Care

Introduction

Why has medical insurance become so expensive—and complicated? Once upon a time, patients were “cash customers” for most of their medical expenses. A patient would see a doctor and pay—usually a him—five dollars for the office visit, and if the ailment were serious enough to require a prescription, the medicine could be purchased for a few dollars at a local pharmacy. I know from my own experience growing up in New York during the 1950s and early 1960s. That’s what my parents paid to have their children diagnosed and treated. There were no co-pays, no deductibles, and no insurance claim forms to fill out. And when my blue-collar father needed a hernia operation in April 1961, his employer-based insurance, Blue Cross/Blue Shield, ...