Okay, the first health insurance, apparently was in 1694. The first U.S. health insurance company was Franklin health insurance company of Massachusetts in 1850. There was an important step forward in health, in Health insurance with the health maintenance organization Act of 1973 which required employers with 25 or more employees to offer what's called an HMO. A health maintenance organization. The idea at that time was that the medical services were generally provided by practitioners, to uninsured people who had to pay when they were sick. The problem was that doctors made more money if people were sick. They would, they didn't have any incentive to prevent disease. So there were people who complained that we needed to have our our health managed by practitioners who had an incentive to keep you healthy to do preventive things. So how do we do that we have to create an organization like the Yale health plan, that keeps you for a lifetime. Let's say that gives regular checkups to you and encourages you to come and talk to the doctor. The doctor has no incentive because a doctor is paid a salary, has no incentive to urge unnecessary surgery on you or the like. So this is what Yale health plan which was a pioneer. It was one of the first HMO's. What they do at, I think you've been there right. They assigned you a primary, which is the gatekeeper for you. And they encourage you to come in for any minor thing which might reveal a more serious problem. In 1986, the U.S. Congress passed another law called EMTALA law. Emergency Medical Treatment and Active Labor Act which required hospitals and ambulance services to provide care to anyone needing emergency treatment. So basically it was a tax on everybody to provide emergency services. Now, you could probably go to an emergency room before 1986 because there was some, public spirit that hospitals would treat you if you came in. But it became mandatory in 1986. But it's not the same thing as health insurance. Because they kind of hope that you take your sick people to another hospital's emergency room not ours, because it comes out of our pocket, if you can't pay. So it's not a... it is a not a great system. Then it came, as you've heard of the U.S. Pain Patient Protection and Affordable Care Act of 2010 called Obamacare. And it tries to deal with the selection bias problem by forcing everyone to sign up. So there's a penalty for individuals not buying insurance. A tax penalty. And a penalty for companies not offering insurance for their employees. So they set up health exchanges that try to regularize the competition among insurance companies. It's a complicated system that the Republicans want to shut down, as soon as possible. But to me, Obamacare reflects some really important issues in insurance namely that the U.S. has had something like 45 million people uninsured. And if they are uninsured then they will go to the emergency room when they are dying but they don't. It's not a good system because they don't get preventive care and they don't, they only end up In the last stage of collapse at the medical system. So it's not perfect. Earlier when you were talking about mandatory health insurance, now that Obamacare is kind of pushing into the direction in the area of health insurance, do you think that's the Right thing? Right. Well see. Health insurance has suffered an important shortcoming in the United States. It's not, hasn't been offered by the government. It's private, and it's often through employers. So suppose you lose your job then you've got to go out and buy health insurance. Now the problem is that they will look at you, and if you are sick they'll say will charge you a very high rate. And so and they also have a selection bias. We talked about this in class that the people who sign up for insurance are the people who know they're sick and need it. So that means you have to charge very high rates and then people who know they're healthy will not sign up because they don't want to pay the high rate. So nobody is insured, or not many people are insured. So the Obama, the Obama Care Act in Congress made it mandatory. You would pay a fine if you don't sign up for insurance. That was supposed to put everyone back into a pool where everyone is insured and was supposed to bring the rates down. So you have to do something like that this, this is the fundamental problem with insurance. If if it's not a risk it doesn't work. If people know there that they are at special risk then it's... it's not going to work. You can only insure against the unknown, but you can make laws that prevent companies from taking account of, of risk factors so that people can buy insurance and that's what Obama here did.
