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Henry J Kaiser (1882-1967) and HMOs

HMOs, or health maintenance organisations, are a form of prepaid health care that provides medical coverage in the United States. The first prepaid schemes started in the early 1900s and share some similarities with British contributory schemes. Usually organised by businesses and community groups, they offered workers medical services for a small monthly premium. The largest of these organisations is the Kaiser Permanente Group, based in Oakland, California. It has 8.7 million health plan members, who receive treatment in Foundation Hospitals and physician partnerships. It was founded in 1945 by the industrialist Henry Kaiser and a physician, Sydney Garfield. Its origins are in Desert Center, California, where in 1933 Garfield originally opened a 12-bed hospital to treat injured workers.

Eager to treat all patients, regardless of their ability to pay, Garfield adopted ideas proposed by an insurance agent, who suggested that insurance companies pay the hospital a set amount, in advance, for each worker covered. Impressed by Garfield’s system, Kaiser encouraged him to commence a similar scheme in 1938 for 10,000 workers in Washington state. Health plans were started for his workers in other states and membership was opened to the public in 1945.

The term ‘HMO’ was invented in the 1970s. By 1978 there were 200 HMOs in 37 states. Though providing many Americans with access to hospital services, HMOs have been criticised for a variety of reasons, such as the speed with which they abandon non-profitable regions. They have also been accused of persuading doctors to limit care by offering financial bonuses. They also control information about services and how to access treatment, usually promoting less costly procedures. They are, nevertheless, growing in popularity and are being studied by those currently involved in reform of the NHS.

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R Hendricks, A Model for National Health Care: The History of Kaiser Permanente (New Jersey: Rutgers University Press, 1993)