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The American Medical Association's policies shape the private insurance company model.

1940s

MED
HPI

The American Medical Association (AMA) decrees that insurance companies cannot question physicians about how they practice. Doctors are not to be salaried but paid by procedure on a fee-for-service basis, which is then covered by insurance. This system incentivizes doctors to oversupply care for the insured, which drives up healthcare prices. Insurers agree to supply businesses with group insurance for their workers in order to help physicians defeat “socialized medicine.”