A Short History Of Health Insurance

No matter what the product, be it health insurance or something else, knowing the history behind it gives you an intangible perspective that is invaluable in being a wise comparison shopper.

​While the history of health insurance is long and complex and could fill many volumes, we offer here a quick overview of this history that provides the most essential information.

Precursors To Modern Health Insurance
In the 19th Century and earlier, there was no such thing as "health insurance" in the usual sense. The first real precursor to the modern system was a form of accident insurance offered by Franklin Health Assurance Company in the state of Massachusetts from 1850. In less than a decade, accident insurance had already become quite common in the US.

Disability insurance to cover lost wages of workers due to workplace injuries and limited sickness coverage plans appeared by 1890, but not any full-fledged, robust version of health coverage. Some hospitals in the first half of the 20th Century began offering prepaid medical plans - and Blue Cross grew out of this movement in the 1930s.

FDR thought about including a full health insurance component in Social Security, but there just wasn't enough support for it at the time. The result of all this was that most people had to pay all or a large portion of their medical expenses out of pocket until new developments appeared following World War II.

Employer-based Plans Become Popular
A limited amount of health insurance had existed in the US from 1890, but it remained small until during and after World War II. The reason was the wage controls imposed on US employers during the war. It was made illegal to raise wages beyond certain limits in an effort to win over workers from your competitors, but fringe benefits like health insurance didn't count as a wage increase. So that's what soon dominated the market.

In 1945, President Truman attempted to implement a federal health insurance system somewhat similar to the ACA system - but it was voluntary and would cover all medical expenses (plus lost wages) provided you paid your monthly premiums. This legislation never passed.

Instead, labor unions fought for employer-based health plans as the most practical and beneficial vision for the future. Between 1940 and 1960, the number of American with health coverage increased sevenfold until 75% had a health plan in 1960.

The Affordable Care Act
Not everyone has to get an ACA-compliant plan under all circumstances today, but it's the norm nonetheless. But where did this idea come from? Did coverage of preexisting conditions and government subsidizing of high-risk policyholders arise in a vacuum? Not at all.

Plans somewhat similar to the ACA were already in existence in 34 states in 2014. These state risk pools guaranteed approval to applicants who couldn't get health insurance any other way. The plans would cost more, have high deductibles, and maybe a lifetime limit - but it was a step towards "universal coverage." And this trend had been going on from 1976 - decades before the ACA was passed.

In 2009, the ACA passed on a partisan basis and became law. Some changes were made by President Obama and later by President Trump. But the ACA remains, despite some continuing controversy over it.

The complexity of the ACA, state marketplaces, and individual health plans are now at an all-time high. This makes it wiser than ever to get advice from an experienced health insurance agent when selecting your plan. To talk to an agent today, don't hesitate to contact Summerlin Benefits Consulting!