A Very Brief History of Health Insurance in the United States
It is often beneficial to look at the past when planning for the future. Following is a very brief history of health insurance.
Before the 1920s, the chief costs associated with illness were lost wages, not the cost of medical care. Doctors had very little to offer in terms of expensive, highly technical treatments. American companies such as railroad and lumber often would pay physicians out of the company payroll to care for their workers. People generally felt actual health insurance was unnecessary.
In 1929 the not-for-profit Baylor Plan allowed teachers in Dallas, Texas to pay 50 cents a month into a fund that guaranteed up to 21 days of hospital care at Baylor Hospital. Many hospital across the country set up similar plans and in the 1940s this type of plan became known as Blue Cross Blue Shield. With the success of Blue Cross and Blue Shield, commercial health insurance companies began to move rapidly into the health insurance market.
During World War II, wage and price controls prevented employers from using wages to compete for scarce labor. Health benefit packages offered one means of securing workers. The government liked the idea of business providing health insurance and changed the provisions of the tax law to make it attractive to offer these benefits.
A key change took place in the 1950s regarding technology, more medications, new vaccines, and the first organ transplant. Less than 10% of Americans had health insurance in 1940; 75% of Americans had some form of health insurance coverage in 1958. Passed in 1965, Medicare offered government sponsored health insurance to persons aged 65 and over. The 1970's saw rapidly escalating health care costs. 1973 brought the HMO Act which provided funding for start-up managed care organizations. Between 1977 and 1987, HMOs experienced a four-fold increase in membership. The 1990's proved that it was possible for health care inflation to more then double the rate of inflation.
|
|
