History of the Business of Healthcare

American healthcare was not designed. It grew in layers, and each layer was a response to the money problem the previous layer left behind. Charity hospitals needed paying patients, so prepaid hospital plans appeared. Wartime wage controls and a tax ruling tied those plans to employers. The elderly and the poor were left out, so Congress created Medicare and Medicaid in 1965 and paid hospitals whatever they said care cost. Cost-based payment made hospitals attractive to investors, so investor-owned chains such as HCA and Humana were born. Runaway costs then produced HMOs, prospective payment and managed care. The backlash against managed care produced consolidation, vertical integration and, from 2009, a federally funded digital layer. This section traces that sequence from the voluntary hospital to the 2024 Change Healthcare hack. It covers the business models each era produced and the patterns that keep coming back. If you know the history, it is easier to tell a structural change from a rebranding.