Editing Health maintenance organization (section)

== History ==
Though some forms of group "managed care" did exist prior to the 1970s, in the US they came about chiefly through the influence of President [[Richard Nixon]] and his friend [[Edgar Kaiser, Sr|Edgar Kaiser]]. In discussion in the White House on February 17, 1971, Nixon expressed his support for the essential philosophy of the HMO, which [[John Ehrlichman]] explained thus: "All the incentives are toward less medical care, because the less care they give them, the more money they make."<ref>{{cite web|last1=Nixon|first1=Richard|title=Transcript of taped conversation between President Richard Nixon and John D. Ehrlichman (1971) that led to the HMO act of 1973|url=https://en.wikisource.org/wiki/Transcript_of_taped_conversation_between_President_Richard_Nixon_and_John_D._Ehrlichman_(1971)_that_led_to_the_HMO_act_of_1973:|website=Wikisource|access-date=7 April 2018}}</ref> 

The earliest form of HMOs can be seen in a number of "prepaid health plans". In 1910, the Western Clinic in [[Tacoma, Washington]] offered lumber mill owners and their employees certain medical services from its providers for a premium of $0.50 per member per month. This is considered by some to be the first example of an HMO. However, [[Ross-Loos Medical Group]], established in 1929, is considered to be the first HMO in the United States; it was headquartered in [[Los Angeles]] and initially provided services for [[Los Angeles Department of Water and Power]] (DWP) and [[Los Angeles County]] employees. 200 DWP employees enrolled at a cost of $1.50 each per month. Within a year, the [[Los Angeles Fire Department]] signed up, then the [[Los Angeles Police Department]], then the Southern California Telephone Company (now [[AT&T Inc.]]), and more. By 1951, enrollment stood at 35,000 and included teachers, county and city employees. In 1982 through the merger of the [[Insurance Company of North America]] (INA) founded in 1792 and Connecticut General (CG) founded in 1865 came together to become [[CIGNA]]. Also in 1929 Dr. [[Michael Shadid]] created a health plan in [[Elk City, Oklahoma]] in which farmers bought shares for $50 to raise the money to build a hospital. The medical community did not like this arrangement and threatened to suspend Shadid's licence. The Farmer's Union took control of the hospital and the health plan in 1934. Also in 1929, Baylor Hospital provided approximately 1,500 teachers with prepaid care. This was the origin of [[Blue Cross Blue Shield Association|Blue Cross]]. Around 1939, state medical societies created [[Blue Cross and Blue Shield Association|Blue Shield]] plans to cover physician services, as Blue Cross covered only hospital services. These prepaid plans burgeoned during the [[Great Depression]] as a method for providers to ensure constant and steady revenue.

In 1970, the number of HMOs declined to fewer than 40. [[Paul M. Ellwood Jr.]], often called the "father" of the HMO, began having discussions with what is today the [[U.S. Department of Health and Human Services]] that led to the enactment of the [[Health Maintenance Organization Act of 1973]]. This act had three main provisions:
* Grants and loans were provided to plan, start, or expand an HMO
* Certain state-imposed restrictions on HMOs were removed if the HMOs were federally certified
* Employers with 25 or more employees were required to offer federally certified HMO options alongside indemnity upon request

This last provision, called the dual choice provision, was the most important, as it gave HMOs access to the critical employer-based market that had often been blocked in the past. The federal government was slow to issue regulations and certify plans until 1977, when HMOs began to grow rapidly. The dual choice provision expired in 1995.

In 1971, [[Gordon K. MacLeod]] developed and became the director of the United States' first federal HMO program. He was recruited by [[Elliot Richardson]], the secretary of the Department of Health, Education and Welfare.