A Brief Review of the History of Federal Health Care Regulations:

Congress has had an active role in regulating health care services for more than 200 years. The Office of Investigator General was established in 1778, and the Department of Health in 1791. It was not until 1906 that the next federal regulatory agency was created, the Food and Drug Administration.

In 1921, for the first time Congress funded services to encourage states to develop programs to serve lower income citizens (the Sheppard/Towner Act), and in 1946 Congress for the first time funded private hospital construction (the Hill/Burton Act).

Beginning in the 1970s Congress expanded its regulatory role significantly. In 1970, Congress created the Occupational Safety and Health Administration and in 1973, the Drug Enforcement Administration. Also, in 1973, Congress enacted Health Maintenance Organization regulations. In 1977, Congress created the Health Care Finance Administration (today called the Center for Medicare and Medicaid Services); and in 1986, Congress created the National Practitioner Data Bank. In 1987, Congress created nursing home regulations; in 1988, clinical laboratory regulations; and in 1989, physician practice regulations (Stark I), which were expanded in 1993 and 1999 (Stark II).

In 1990, Congress enacted the Americans With Disabilities Act, which further expanded federal health care service oversight. In 1996, patient/provider and provider/provider communication restrictions were enacted (the HIPPA Privacy regulations).

In addition to the regulatory expansion, beginning in the 1960s other congressional initiatives were enacted intended to expand access to health insurance, health care services, and improve service quality.

In 1965 Congress passed Titles XVIII (Medicare) and XIX (Medicaid) of the Social Security Act. Over the next decade Congress created programs to expand services to other uninsured populations (Office of Economic Opportunity), to promote alternative delivery systems and insurance arrangements, such as Health Maintenance Organizations (HMOs) and Preferred Provider Organizations (PPOs), to fund hospital expansion, to fund health professional training programs, and to create a comprehensive health planning framework.

By the late 1970s, access improved for seniors and indigent citizens. Some service quality improved with the creation of regionalized tertiary centers. However, costs continued to rise at an alarming rate.

By 1979, because of increasing health insurance costs, a “health care crisis” dominated political discourse. American companies were not competitive because of excessive employee health insurance costs. Middle class families had difficulty accessing services because they could not afford basic health insurance coverage.

Beginning in the 1980s, reacting to pressure to control costs, Congress eliminated the failed comprehensive health planning law and promoted additional health service delivery organizational structure changes intended to reduce costs. These initiatives encouraged (1) the development of comprehensive outpatient programs, (2) the expansion of medical group practices, (3) the collaboration between physicians and hospitals (Physician Hospital Organizations-PHOs), (4) the promotion of “managed care” programs, and (5) hospital ownership consolidation. However, costs continued to increase at a rate that exceeded inflation.

In 1997, Congress, responding to pressure to eliminate significant Medicaid enrollment requirement differences among states, created the Children’s Health Insurance Program to insure that children’s family income, not residence defined eligibility.

Two additional policies were implemented specifically to control the cost of government funded insurance programs. In 1984, the Diagnostic Related Group (DRG) payment system was created. In 1997, the sustainable growth rate formula was initiated. Both failed to reduce cost or slow increases. In 2016 the sustainable growth rate formula was repealed. The DRG payment system is still in effect today.

In 2010, the Affordable Care Acts were enacted. Congressional intent was to increase the quality and affordability of health insurance, to transform hospital and physician practices financially, technologically and clinically, and to improve service access and quality.