HISTORY OF HEALTH INSURNCE
I stopped for a moment to imagine an average Americana’s world without a health insurance, what will become of such individual when the need for healthcare beckons? How will such individual offset the outrageous bill of healthcare? Health insurance is used in America to describe any program that helps pay for medical bills through the following: privately purchased and social insurance or a social welfare program usually powered by the government. Simply put, health insurance is any form of insurance that provides protection by offsetting the actual costs of medical services.
Before the onset of federal government’s intervention on health insurance, it can be ...view middle of the document...
Then the advent of World War II in conjunction with the growth of labor movement and the federal tax code all bolstered the growth of employer sponsored coverage. During the World War II, America’s market was in shortage of labor worker with a relative increase in demands for goods, as such, to respond to this shortage, workers were attracted with fringe benefits in form of employer sponsored coverage. By the end of World War II, America’s health insurance saw an enormous growth of 23 percent insured Americans as compared to the 9 percent of the population having health insurance as at the eve of World War II.
To help lessen healthcare problem in the 30’s, a system was designed in the state of Dallas by Baylor Hospital which later became Blue Cross to help people pay for their healthcare bills. As a natural progression to sophistication in medicine, people patronized the hospital for healthcare while cost shoots up ambitiously. A special prepaid plan which serves to rival Blue Cross by providing another choice to people was formulated- Blue Shield. Later on both organizations merged to become the Blue Cross and Blue Shield. It can be said that Blue Cross and Blue Shield companies were the harbinger of health insurance in the United States.
Blue Cross and Blue shield enjoyed enormous success, this encouraged other profit based insurance companies to venture into the healthcare market. Erstwhile, Blue Cross and Blue Shield was a nonprofit based organization that charged all insurers the same premium, but the advent of these profit based insurance organizations changed the situation of things in the market. What did they do? They charged premiums based on epidemiological facts: Age, gender, status of health and preexisting health conditions. Doing this means the more healthy ones would be insured ignoring the less healthy individuals which equals more profit for the profit based insurance organizations. This generated a ripple effect which caused the Blue Cross and Blue Shield organization to follow their model.
Even with the advent of employer sponsored coverage, there were still some loop holes in health insurance, a considerable subsets of people were not benefitting from it- the impoverished, day to day laborer, those who had no job at all and importantly, retirees of age 65 usually lost their employer sponsored coverage. Thanks to the J.F. Kennedy administration that put a new song on the lips of people in dire need of health insurance. His administration initiated a government sponsored healthcare where the elderly were really considered. This marked the onset of Medicare and Medicaid- Providing healthcare for retirees, aged and the impoverished.
The concept of Medicare and Medicaid involves the federal government paying back physicians for taking care of the retirees, aged and the...