Look At The History of Health Insurance in America
While the battle rages of health insurance and health care reform, one question that has not come up is, when and how did the concept of health insurance begin in the United States? From what innocent seed did this current debate arise?
The concept of health insurance had a shaky beginning. Before 1847, which is when the Massachusetts Health Insurance of Boston became the first company to offer a policy with comprehensive benefits, individuals were able to purchase accident plans. These plans offered compensation to individuals only if they suffered an injury during travel on a steamboat or by train. This could possibly be considered the first example of “rationing of care.”
By the 1890s, insurance companies emerged and began offering individual health insurance policies that provided coverage for illnesses and disease as well as accidents. As the United States entered the twentieth century and World War I, groups began to talk to health care providers about a type of relationship that would eventually evolve into the fee-based contracts that exist today.
Just about the time the Great Depression burst onto the scene, the first modern group health insurance plan was put together by a group of teachers in Dallas. The educators contracted with Baylor Hospital for room, board, and medical services for which they agreed to pay a monthly fee. The American Hospital Association soon encouraged other hospital to initiate similar plans. Soon both profit and nonprofit entities entered the health insurance picture. The nonprofit Blue Cross and Blue Shield Plans burst onto the scene in 1932 with group health plans which were popular and successful because they offered discounted contracts worked out with physicians and hospitals.
During the World War II years and into the 1950s, employee health insurance plans were in development. Unions stepped in and negotiated for improved benefit packages for their members, including employer-sponsored health insurance. Union efforts on behalf of health insurance were spurred by the war because when wages were frozen, adding health care to an employee’s benefit package was a way to attract workers.
The US government began to become more involved in health insurance and health care during the 1950s and 1960s. In 1954, disability benefits were included in social security coverage for the first time. Medicare and Medicaid were created in 1965, but at that time private sources paid 75 percent of total health care costs. By 1995, the responsibility for payout was 50-50, divided between individuals and companies and the government. The 1980s and 1990s brought a rapid rise in health care costs, and most health insurance plans sponsored by employers switched from a fee-for-service plan to the less expensive managed care approach.
A push for health care reform was presented by President Bill Clinton in 1993, but Congress rejected the plan, saying it was too expensive and too heavily regulated. A series of acts concerning health insurance have followed, including but not limited to the Mental Health Parity Act, which requires some employers to offer health plans with psychiatric benefits; the Health Insurance Portability and Accountability Act in 1996, which protects people from losing their health insurance when they leave one job to go to another or to become self-employed; the Children’s Health Insurance Program (CHIP), which provides insurance to low-income children; and the Genetic Information Nondiscrimination Act, which prohibits health insurance companies from discriminating against people because genetic testing has shown that they are at risk for a certain condition or disease.
What will the history books say about health insurance from 2009 and into the future? That history is being written at this very moment. Whatever it turns out to be, health insurance in the future will likely have a very different look than the health insurance of the past.
Written by Deborah Mitchell
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