In my holiday fervor, I forgot some key points. Doing a quick lit search brought up this lovely paper from 2008 “Health care reimbursement: Clemens to Clinton” by John T. Preskitt, MD. (John you and I should just settle down and raise a family we are perfect for each other). The answer to my stutter about when fee-for-service originated? It evolved along with Medicare, and was recognizable by the late 1950s. Managed care brought it into full flower.
One more point to be made. A crucial drawback of fee-for-service: profiting from mistakes. If you are thoughtlessly administered a drug you are allergic to–and now you’re needing all the care someone in anaphylaxis gets–you and your insurance will be billed for the privilege. Mistakes happen. Medicine is human. But failure should not be rewarded with money.
Pull quote from Preskitt’s article, which I am nicknaming “Ghosts of insurance past”
Managed care was supposed to create a system that would contain costs while simultaneously increasing the quality of care. Our traditional fee-for-service medicine had led to health care inflation because it encouraged caregivers to maximize the number of procedures they perform, ignoring preventive care. Doctors and hospitals were not paid to keep patients well; they were paid to treat them when they were sick.