The History of Health Insurance
Before health insurance existed, patients who needed health care had to pay the cost out of their own pockets. People who could not afford health care had to go without medical assistance. Then, during the 1920s, cities urbanized, bringing large numbers of residents to a single area. This brought on the need for more hospitals, who began allowing patients to pre-pay their health insurance. In 1929, Blue Cross was formed by a group of teachers. This first plan offered 21 days of hospital stay for $6.
Health insurance grew in popularity in the United States during the 1940s when many men went off to fight in World War II. The nation’s companies were left with fewer workers than normal. Wage controls prevented companies from attracting workers by offering more money. So instead, employers lured employees by offering health care benefits. Since the cost of health care was spread across several different people, companies were able to negotiate lower costs for themselves and for employees.
The federal government made it easier for families to pay for health insurance. In 1943, the IRS determined that employee payments to health insurers were not taxable. Then, in 1954, they made health plan payments exempt from taxable income.
During that time, pharmaceutical companies started producing more medicines to help the sick. However, these medicines were often too expensive for individuals to afford on their own. So, insurance companies began providing an additional benefit by paying for prescription drug coverage.
In 1965, the government developed two programs to help the elderly and poor gain access to health care. Today, we know these programs and Medicare and Medicaid.
In 1985, Congress approved the Consolidated Omnibus Budget Reconciliation Act which allowed employees to continue coverage under a employers group health plan for a certain amount of time after leaving the company. COBRA also allows divorced spouses and other dependents to continue coverage.
By the time the 1990s came around, the cost of medical services had risen so much that even pay-as-needed services were out of reach for many employees. Third party managed-care programs came into existence, lowering the cost of health care. These managed-care programs included Health Managed Organizations, HMO, which require you to choose a primary care physician and Preferred Provider Organizations, and PPO, which lower your costs when you select from a group of doctors within a network.
In 1996, Congress passed the Health Insurance Portability and Accountability Act allowing employees to keep insurance when they changed jobs.
As early as the 1930s, there have been proposals to nationalize health care. It has been a recurring conversation as many of the nation’s population have to live without health care. In 2006, Massachusetts passed a mandatory heath insurance law that requires all citizens to receive health care. Though politicians continue to have the discussion, there is no national health care for United States citizens.
March 12, 2009, Posted by Rainy Day Mitch