The Development Of Modern Health Insurance
Health insurance as a concept gained traction as the Great Depression took hold of the United States. It was nearly impossible for many Americans to meet everyday expenses, and paying the costs related to medical care for illnesses or accidents was a major hardship. The introduction of 1935s Social Security Act and unemployment compensation brought the need for comprehensive health insurance to the forefront for many legislators.
As World War II rolled in with the mid-1940s, employers and employees were facing the harsh realities of wage freezes. As a result, employers began developing benefits packages in lieu of wage increases that included group health insurance. As you could imagine, health insurance was a very desirable benefit.
In 1949, the United States Supreme Court would rule that, as part of the Taft-Hartley Act, employers would be required to bargain on welfare issues. This would lead to the spread of prepayment concepts and health insurance throughout the nation. As a result, Blue Cross and Blue Shield plans would spread rapidly throughout the nation as well.
The Complete History Of Employer
Originally published on March 5, 2021. Last updated March 31, 2021.
What if we told you that the creation of health insurance was actually an accident? Or that the way we think about health insurance is changing? Here, well cover the history of health insurance in the U.S., how its evolved over the years, and what the future of health insurance might bring for you and your organization.
Early History Of Health Insurance
The first official documentation of insurance for health issues was in 1847 when the Massachusetts Health Insurance Company of Boston became the first company to offer insurance for illness. However, it was still several decades before the employer-based health insurance system that Americans are familiar with today began.
In the 1870s, professions that were considered more dangerous, such as the railroad fields and mining, began to offer onsite company doctors for their employees. These doctors were paid for with deductions from employees paychecks.
Through the late 19th century and early 20th century, if people had health insurance, they mostly paid for it individually. It was not until 1910 that Montgomery Ward and Company entered into one of the first group insurance contracts and 1912 was the first year that the National Convention of Insurance Commissioners developed the first models for laws that would begin to regulate the health insurance industry.
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What Health Insurance Trends Mean For Your Organization
If 2020 has taught us anything, its that predicting the future is practically impossible. As interest in employer-provided health benefits versus the individual market continues to ebb and flow, the flexibility offered through health reimbursement arrangements can offer your employees the freedom of choice to meet their unique and ever-changing needs.
With an HRA, your employees can get their medical expenses and insurance premiums reimbursed 100% tax-free. PeopleKeep provides three unique HRAs to give employers the option to offer their employees an HRA: as a stand-alone benefit combined with individual coverage or even in conjunction with group coverage.
Late 1800s To Medicare
The campaign for some form of universal government-funded health care has stretched for nearly a century in the US On several occasions, advocates believed they were on the verge of success yet each time they faced defeat. The evolution of these efforts and the reasons for their failure make for an intriguing lesson in American history, ideology, and character.
Other developed countries have had some form of social insurance for nearly as long as the US has been trying to get it. Some European countries started with compulsory sickness insurance, one of the first systems, for workers beginning in Germany in 1883 other countries including Austria, Hungary, Norway, Britain, Russia, and the Netherlands followed all the way through 1912. Other European countries, including Sweden in 1891, Denmark in 1892, France in 1910, and Switzerland in 1912, subsidized the mutual benefit societies that workers formed among themselves. So for a very long time, other countries have had some form of universal health care or at least the beginnings of it. The primary reason for the emergence of these programs in Europe was income stabilization and protection against the wage loss of sickness rather than payment for medical expenses, which came later. Programs were not universal to start with and were originally conceived as a means of maintaining incomes and buying political allegiance of the workers.
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The 1960s: Social Security Expansion
By 1960, the government started tracking National Health Expenditures and calculated them as a percentage of Gross Domestic Product . At the start of the decade, NHE accounted for 5 percent of GDP.
When John F. Kennedy was sworn in as the 35th President of the United States, he wasted no time at all on a healthcare plan for senior citizens. Seeing that NHE would continue to increase and knowing that retirees would be most affected, he urged Americans to get involved in the legislative process and pushed Congress to pass his bill. But in the end, it failed miserably against harsh AMA opposition and again fear of socialized medicine.
After Kennedy was assassinated on November 22, 1963, Vice President Lyndon B. Johnson took over as the 36th President of the United States. He picked up where Kennedy left off with a senior citizens health plan. He proposed an extension and expansion of the Social Security Act of 1935, as well as the Hill-Burton Program .
Johnsons plan focused solely on making sure senior and disabled citizens were still able to access affordable healthcare, both through physicians and hospitals. Though Congress made hundreds of amendments to the original bill, it did not face nearly the opposition that preceding legislation had one could speculate as to the reason for its easier path to success, but it would be impossible to pinpoint with certainty.
What Changes Can We Look Forward To In The Coming Years
Beyond 2019, predictions are far from being set in stone. But looking into the crystal ball, some possibilities in the insurance field seem highly likely for the future based on current trends.
Some states and even cities are taking the reins in providing health coverage and incentives to their residents. States with their marketplaces and Medicaid expansions have the option to offer their residents the most insurance options. Also, states with state-supported markets tend to have fewer uninsured. For instance, Texas has the highest percentage of uninsured, at 18.8 percent in 2014. The only marketplace available was the federal one with no Medicaid expansions in the state. California, Washington and New York all expanded Medicaid and offer state marketplaces. In these states, uninsured levels are below 12.5 percent.
Federal funding of health insurance will affect the change in premiums. If the national government funds health insurance pools to reduce the impact of having a higher percentage of high-risk individuals, premiums could decrease. Estimates suggest federal spending on healthcare of $15 billion during 2019 and 2020 could cut rates by nine to 16 percent. With the number of uninsured likely to rise due to the repealed penalty, without federal money, premiums could increase even more.
These future changes are far from guarantees. Many factors influence the health insurance field, including federal and state politics, economics and the health care industry.
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To Make Health Insurance More Affordable
In order to make health insurance more affordable, the ACA included:
Premium tax credits
- Americans with household incomes below 400 percent of the federal poverty line qualify for premium tax credits which cap the cost of a qualifying households individual health insurance policy as a percentage of the households income.
- States have the option of expanding Medicaid eligibility to citizens with household incomes up to 138 percent of FPL.
- The individual mandate, which used to require all U.S. citizens to purchase health insurance or pay a tax penalty, was originally designed to diversify the risk pool with healthy participants in order to lower costs. This mandate has since been repealed, and today only certain states still enforce a penalty.
The 1700s: Colonial Times
Medicine was fairly rudimentary for the first few generations of colonists who landed in the new world, primarily because very few upper-class physicians emigrated to the colonies. Women played a major role in administering care in these early days, most especially when it came to childbirth.
Mortality in those early days was extremely high, most notably for infants and small children. Malaria was particularly brutal, as was diphtheria and yellow fever. Most of the sick were treated with folk remedies, though smallpox inoculation was introduced earn-on In these early days, there was virtually no government regulation or attention paid to public health.The first medical society was formed in Boston in 1735. Fifteen years later, in 1750, the first general hospital was established in Philadelphia.
In 1765, the Medical College of Philadelphia was founded. Two years later, the medical department of King’s College was established in New York and in 1770, they awarded the first American M.D. degree.
History Of Healthcare Insurance In United States
Read a brief History of Healthcare Insurance in the United States, as the health care insurance industry is undergoing an evolutionary process driven by US government health care reforms and public healthcare interest issues.
Insurance, broadly speaking, is designed to protect someone from loss and has been used in different forms since the second millennium BC. As medical knowledge became more advanced it also became more valuable.
Medical practitioners soon moved from practicing medicine in their homes to a centralized medical practice. As time went on, physicians became more knowledgeable and specialized. To further their research resources were necessary and expenses started to accrue. Because of the expenses necessary for medical advances, the cost of medical services started to rise.
Life insurance has a long history that reflects humankindâs awareness of its mortality.
Status Of The Uninsured
The uninsured proportion was stable at 14â15% from 1990 to 2008, then rose to a peak of 18% in Q3 2013 and rapidly fell to 11% in 2015. The proportion without insurance has stabilized at 9%.
A 2011 study found that there were 2.1 million hospital stays for uninsured patients, accounting for 4.4% of total aggregate inpatient hospital costs in the United States. The costs of treating the uninsured must often be absorbed by providers as charity care, passed on to the insured via cost-shifting and higher health insurance premiums, or paid by taxpayers through higher taxes.
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Health Insurance In The United States
Health insurance in the United States is any program that helps pay for medical expenses, whether through privately purchased insurance, social insurance, or a social welfare program funded by the government. Synonyms for this usage include “health coverage”, “health care coverage”, and “health benefits”.In a more technical sense, the term “health insurance” is used to describe any form of insurance providing protection against the costs of medical services. This usage includes both private insurance programs and social insurance programs such as Medicare, which pools resources and spreads the financial risk associated with major medical expenses across the entire population to protect everyone, as well as social welfare programs like Medicaid and the Children’s Health Insurance Program, which both provide assistance to people who cannot afford health coverage.
In addition to medical expense insurance, “health insurance” may also refer to insurance covering disability or long-term nursing or custodial care needs. Different health insurance provides different levels of financial protection and the scope of coverage can vary widely, with more than 40% of insured individuals reporting that their plans do not adequately meet their needs as of 2007.
Why Did These Efforts For Universal National Health Insurance Fail Again
For may of the same reasons they failed before: interest group influence , ideological differences, anti-communism, anti-socialism, fragmentation of public policy, the entrepreneurial character of American medicine, a tradition of American voluntarism, removing the middle class from the coalition of advocates for change through the alternative of Blue Cross private insurance plans, and the association of public programs with charity, dependence, personal failure and the almshouses of years gone by.
For the next several years, not much happened in terms of national health insurance initiatives. The nation focussed more on unions as a vehicle for health insurance, the Hill-Burton Act of 1946 related to hospital expansion, medical research and vaccines, the creation of national institutes of health, and advances in psychiatry.
What Does History Teach Us What Is The Movement Reacting To
The Universal Health Care Debate The Aall The Afl And The Ama
Plans did looked good in the beginning, though, as, according to the history of health care section of the Physicians for a National Health Program website, in 1912, the American Association of Labor Legislation , a progressive group whose aim was to reform capitalism, created a committee to focus on health care issues. In 1915, the committee drafted a health care bill, which, essentially, covered the working class and all others who earned less than $1200 a year, including dependents.
The upshot was that physicians were consulted and even the American Medical Association ended up supporting the proposal. For a while, the AMA and AALL worked together like long-lost cousins at a family barbecue, but eventually the sides fell into disagreement on how to pay physicians. Shortly thereafter, the AMA retracted all support for the proposal and, later, the AALL altogether.
To muddy the waters further, the then president of the American Federation of Labor repeatedly denounced compulsory health insurance on the shortsighted basis that looking out for American peoples health was not the Governments responsibility but the Unions.
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Initial Healthcare Insurance Forms
Massachusetts Health Insurance of Boston offered early group policies with a relatively comprehensive list of benefits as early as 1847. The earliest forms of health insurance, howÂever, did not emerge until 1850, when the Franklin Health Assurance ComÂpany of Massachusetts began providing accident insurance, to cover injuries reÂlated to railroad and steamboat travel.
Individual accident insurance proved a successful venture, so these kinds of early plans began to evolve into more expansive programs that covered a broader range of illness and injury, including early versions of disability coverage by the end of the 19th century.
Benjamin Franklin: America’s First Insurer
Property insurance was certainly not an unknown concept in the 18th century: England’s famed insurer Lloyd’s of London was established in 1688. But it took until the mid-1700s for the American colonies to become prosperous and sophisticated enough to adopt the concept. That happened in Philadelphia, which at 15,000 residents was one of the largest cities in North America at the time.
The city was haunted by a fear of fires. Much like London in the 1600s, houses at the time were made almost entirely out of wood. Worse yet, they were built close together. This was originally for security reasons, but as cities grew, developers built homes very close to each other for the same reasons they do todayto fit as many as possible on their plots of land. Although much of Philadelphia was built with wide streets and brick or stone structures, conflagrations were still a concern.
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Trends In Private Coverage
The proportion of non-elderly individuals with employer-sponsored cover fell from 66% in 2000 to 56% in 2010, then stabilized following the passage of the Affordable Care Act. Employees who worked part-time were less likely to be offered coverage by their employer than were employees who worked full-time .
A major trend in employer sponsored coverage has been increasing premiums, deductibles, and co-payments for medical services, and increasing the costs of using out-of-network health providers rather than in-network providers.