Guide to health insurance origins and history

Guide to health insurance origins and history

Health insurance as we’ve come to know it in the United States grew out of the wage and price controls imposed during WWII. With wages frozen, employers needed other incentives for workers to hire on and stay with them, and received permission from the government to offer health insurance – simple policies that paid medical expenses for their employees. It wasn’t costly because the insured were all healthy working-age adults (and sometimes their spouses and children), and health care costs at the time were easily affordable.

Health insurance plans before WWII

Of course, there were health insurance plans before WWII – indeed, national health insurance was one of Theodore Roosevelt’s proposals in his 1912 campaign for President. However, no actual health insurance plans existed in the US until 1929, when Baylor University offered paid hospitalization to groups of teachers in exchange for a 50-cent per month contribution. This modest beginning was the start of the modern Blue Cross-Blue Shield health insurance empire.

While most forms of insurance in the US are purchased by individuals, the largest market for health insurance is employers, who purchase group plans to cover their employers (and sometimes their families). While this practice started in response to economic restrictions during WWII, it remained prevalent ever since, largely because the Internal Revenue Service ruled that the premiums paid by employers for group health insurance coverage for their employees were tax-deductible.

Increased health care cost

With the explosion of medical knowledge and treatment opportunities in the second half of the twentieth century and continuing to the present, the costs of health care (and insurance) have skyrocketed so that privately purchased health insurance is often prohibitively expensive. In addition, despite the lucrative tax benefits available to employers for their payment of health insurance premiums, most employers today require that employees also contribute a significant percentage of their health insurance premiums.

Estimates vary, but the consensus is that about ten to fifteen percent of Americans have no health insurance coverage. When they get sick and need medical attention, it’s available to them, but the cost is borne by all – healthcare providers who are forbidden from turning away the indigent sick, and their regular funding sources – insurance companies and the government. Both of these sources raise that funding either from policyholders or taxpayers.

Universal healthcare

Recent calls for universal healthcare or health insurance seek to address the problems caused by the uninsured utilizing the system only when they’re very sick, disproportionately straining resources intended for critical care, when much of that strain could have been avoided if they’d been routine participants in the healthcare system and availed themselves of routine preventive care.

Opposition to calls for universal health insurance centers on the concept that the America government holds no Constitutional mandate to involve itself in the mechanism by which Americans’ health is maintained, while proponents insist that the system that’s grown to date is a patchwork approach to healthcare delivery that ignores whole segments of the population and threatens to create an underclass of the medically vulnerable.