Modern health insurance actually began in the form of hospital insurance during the Great Depression when the high cost of hospitalization threatened the economic well-being of both individuals and hospitals. The American Hospital Association supported hospital insurance, and helped organize hospital plans into the Blue Cross network while the California Medical Association started the Blue Shield plan to pay for physicians outpatient services.
Private health insurance formerly called voluntary health insurance began to evolve and expand in the United States in the s. Health insurance became employer-based during the World War II era when, due to wage freezes, health insurance was used to compensate for the loss of salary increases. Until recently, approximately 60 percent of Americans received their health insurance from their employers. The video below from Humana provides a brief summary of the evolution of US Healthcare starting with the s.
Before publicly financed health insurance was available, government provision of healthcare services to the poor took place at specific care sites, including municipal hospitals and state mental hospitals. Both of these programs were created in as part of Lyndon Johnson's Great Society initiatives. Medicare and Medicaid are very different programs in terms of population serviced, funding source, funded services, and management.
Medicare is a federal program, designed to provide coverage to the elderly and permanently disabled. Medicaid is a jointly funded program of the federal and state governments, and funding varies greatly among states.
There is a saying that if you have seen one state Medicaid program, you have seen one state Medicaid program. Through these historical events the various forms of insurance coverage for health care can be summarized by the graphic below on the left. The pie chart shows the percentage of the US population covered by each type..
In contrast to Europe, national health care failed to get an early footing in the United States due to a number of factors. Health care lingo can be an alphabet soup of terminology. Insurance typically comes in two forms: public and private. Your employer may pay for private plans, or you can purchase the coverage directly from an insurer. Most Americans carry a form of private coverage.
Meanwhile, the government subsidizes public plans for certain groups of people — Medicaid covers low-income individuals while Medicare covers the elderly. Today, the number of uninsured in the United States has declined for the first time since In , the number of uninsured was 44 million. After the Affordable Care Act required all Americans to carry insurance in , the uninsured number dropped by almost half to 28 million Americans.
Then, the U. Initially, people paid what they could for professional health care, which often meant people went without, seeking care only in life-or-death situations.
The avoidance of hospitals came from their poor reputation. Hospitals improved in their care and success rates, especially with the introduction of sanitation measures and antibiotics. The earliest inklings of what would evolve into health insurance appeared in lumber companies in Washington state in the s. At the time, the companies paid a pair of doctors to offer care to their employees.
Hospitals in Texas banded together in to create a means of helping patients pay for care. This first health insurance, Blue Cross, helped cover the costs of a hospital stay. Dallas-area teachers were some of the first to benefit from hospital expense coverage in return for a cent monthly premium. Eventually, the idea caught on with the local media and spread through the north Texas area until three million people were members of Blue Cross in The insurance allowed teachers and other earners of modest incomes a means of avoiding bankruptcy if they required medical care.
In California, another group sought to solve this problem by creating Blue Shield to cover doctor visits. In , the two merged to become the insurance company Blue Cross Blue Shield, which still operates today.
During the s, innovations in medicine meant hospitals could save lives that would have been lost in the past. These discoveries, such as intravenous anesthetic also increased the costs of care. The demand for insurance that would pay for the higher costs was soon to increase dramatically.
During the Great Depression, people scrimped any way they could, including by cutting out pricey hospital stays. Despite the widespread availability of Blue Cross in most states in the country, it remained unpopular in an economy where people cut out extra costs as much as possible. When World War II broke out, American men flocked to enlist in droves, but those who stayed behind needed jobs, mainly to fuel the manufacturing machine of the war.
To encourage people in the smaller workforce to come work for certain factories, the owners began offering incentives, such as health insurance with the jobs. A law passed in froze wages , preventing companies from using higher salaries to attract workers. In , the Internal Revenue Service changes how it treated health insurance benefits from employers. Now, they were tax-free.
Later, in , additional laws made getting health insurance from an employer even better on tax rolls. In fact, the numbers showed how many people took advantage of the new regulations. In , only nine percent of those in the United States had health coverage , but by , this number ballooned up to 63 percent of the country.
Another leap in medical advancements during the s, such as the Polio vaccine, doubled the cost of care from a hospital.
The higher prices made insurance even more of a requirement, but those who did not have employer-provided insurance found themselves in positions where affording coverage was difficult.
To help the elderly and indigent afford health care, President Johnson signed Medicaid and Medicare into law in the s. Under President Nixon, health maintenance organizations HMOs became the new name for group health plans. Both of these plan types are still available today, in addition to variations on them. Today, many Americans expect health insurance benefits with their jobs. The United States is the sole country on Earth with such a reliance on employer-provided health coverage.
Initially, health insurance was designed to cover only major problems. If you needed to go to the hospital or to get surgery, that was what the insurance would help pay for. It was not intended to pay for doctor visits or preventative care.
Those things were up to the individual. This blog, launching today, is a new approach for us in how we communicate about the work we do to our members, our industry, the news media, policy makers and healthcare influencers. Find member information , links to policy and healthcare developments happening in Washington, DC , the latest healthcare news , healthcare intelligence and research , healthcare social networking groups , and access to exclusive opportunities designed to help you live a healthier lifestyle.
The Blues invented health insurance. And we will continue to reinvent health insurance with the same spirit of innovation that has helped to improve the lives of generations of Americans.
Below are milestones in the history of Blue Cross and Blue Shield companies: Early forerunners of Blue health insurance plans appeared as pre-paid group practices. Plan members paid a monthly premium and received a wide range of medical services through an exclusive group of providers. In just 10 years, enrollment in these plans will grow from just more than 1, covered lives to 3 million.
Carl Metzger, an early pioneer in the Blue movement, wanted a company brand logo that would distinguish the new medical service plan. He also wanted to make sure that there was an obvious link to the companion hospital plan. It soon flourished among the growing number of Blue Shield Plans.
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