Bettman

By Gregory DL Morris

In no small irony, the common expression“ the operation was a success, but the patient died”’ could be said to describe the business history of healthcare and health insurance in the United States. From a purely operational perspective, hospitals deploy a dazzling array of technology and capabilities, and health insurance companies are highly profitable. They reduced their loss ratios— claims paid as a percentage of premium— from 95 % in 1993 to 80 % in 2010. At a policy level, the industry’ s success is founded in no small part on the favorable tax treatment of employersponsored insurance.

For all that, though, there is broad and deep dissatisfaction with the system. Few industries are as widely resented and mistrusted. Some of that stems from the complexity and inconsistencies of coverage rules and claims procedures. Mostly,

President Lyndon B. Johnson signs the Medical Bill, July 7, 1965. though, that is because of those same low loss ratios. To executives and shareholders, that is a feature; to those whose claims have been denied, it’ s a flaw.

As CNN reported in December 2024,“ Americans’ pent-up fury with the nation’ s health insurance industry burst into the spotlight last week after the fatal shooting of UnitedHealthcare CEO Brian Thompson in midtown Manhattan. They flooded social media with posts and videos about denials of medical treatments and claims, as well as other frustrations with the complicated system.”

American healthcare is increasingly publicly financed yet investor owned, a trend accompanied by rising costs and worsening population health, according to the 2023 study,“ Century-Long Trends in the Financing and Ownership of American Health Care,” by Adam Gaffney, Steffie Woolhandler and David U. Himmelstein, published in the Milbank Quarterly and available through the National Institutes of Health’ s National Library of Medicine. 1

“ For-profit ownership of most health care sub-sectors has risen in recent decades and now predominates in several( including nursing facilities, ambulatory surgical facilities, dialysis facilities, hospices and home health agencies),” the study said.“ However, most community hospitals remain not-for-profit. Additionally, over the past century, a growing share of physicians identify [ themselves ] as employees.”

Those structural shifts have been accompanied by dramatic changes in who pays for healthcare and who owns and controls it, the study found.

“ Current patterns of health care financing and ownership reflect historical crosscurrents of public policy, corporate power, philanthropy, professional prerogatives and patients’ needs. Private ownership of hospitals, for instance, has long been the norm. Yet public hospitals have always played an important role, starting with the founding of New York’ s Bellevue Hospital in 1736 and a federal hospital system for sailors under the 1798 Act for the Relief of Sick and Disabled Seamen, signed into

20 FINANCIAL HISTORY | Summer 2025 | www. MoAF. org