Free Thoughts

Starting in the 1930’s, the American Medical Association (AMA) reluctantly agreed to accept a health insurance model because they feared the federal government would overreach into the health care sphere. They decided that the best way to protect themselves was to have only the insurers finance health insurance. A huge component of this was that every physician would be paid for each service they provided during a patients’ visit. Essentially, the AMA drove health care costs up by incentivizing physicians to provide any relevant tests because they would be paid for every service during each appointment. To the physician, they were charging a faceless third party somewhere, for each service, rather than thinking they are charging their patients for each service. Therefore, costs were already a huge problem before Medicare passed in the 1965. Today, we have to look at how hospitals and doctors are incentivized in order to analyze our overall health care system. Essentially, the AMA enabled government interventi