There were no anti-biotics and few complicated surgical procedures. You went to the doctor, or if you were too sick, the doctor came to see you. If you were really sick, or needed surgery, you went to the hospital and whatever happened, you were presented a bill which you paid out of your own pocket. Most hospitals had charity wards and most doctors treated patients they knew could not pay, but it was a direct doctor/ hospital to patient transaction.
A Little History
During World War II, the American government imposed wage and price controls, limiting what factories and companies could pay in salaries. Some large corporations began offering health insurance as a way of providing a benefit to workers while getting around the wage controls. This was simple hospitalization insurance. Most out-patient procedures were not covered. But it was a foot in the door for the insurance companies and marked the beginning of third-party financing of health care costs.
After the war, the men came home and with Europe's economy in ruins, the American manufacturing engine went full steam ahead. Business was booming during the 1950's and health insurance became a normal corporate job benefit and unionized worker perk. Hospitals began to depend on it and what was covered by it expanded. By the 1960's the system was in place, and since most people had health insurance, and were no longer paying their own medical bills, they began to abuse the system.
Since the only people who didn't have insurance were those who were not working, in the 1960's Medicare and Medicaid were passed into law as government run insurance programs for those over 65 and for poor families. Along with corporate profits, corruption and abuse of the system also grew.
By the 1980's, the system was out of control. Waste and corruption ran rampant as it always does when a third party pays the costs. Who cares if the cotton balls in the hospital cost $15. each if it's covered by insurance?
In an effort to control things, the current system was set up as a compromise after the failure of Bill and Hillary Clinton's 1993 attempt to reform the system. Like most compromises, it was a disaster. Insurance companies and HMO's got fat with profits while doctors, patients and hospitals suffered.
The Future of American Healthcare
Today, Americans have the world's highest health care costs as well as the highest infant mortality rate in the developed world and one of the lowest life expectancies. Families are paying health care premiums that are as high as their mortgage payments, and often find claims rejected or coverage denied when it is needed most.
In fact, 75% of all bankruptcies in America are related to healthcare costs. This is a shameful situation which if allowed to continue will bankrupt the nation financially as well as morally.