The History of Health Insurance

The History of Health Insurance

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Good health is a right, not a privilege, and people in this great country have a right, to good, inexpensive health care, despite what those idiot right-wing, neo-con kooks, in bed with the health insurance industry, seem to think. They seem to think, if ya don't have the bucks, then ya don't deserve to be healthy. Shame on them! Following is a brief history of health insurance. Hope ya enjoy it, and find it informative.

PAGE CONTENTS:
History of Health Insurance
The Start of Modern Health Insurance
History of Medicare and Medicaid
Medicare and the Neo-Cons

History of Health Insurance
Many historians trace health insurance back to ancient civilizations like Greece and Rome. Imagine, for instance, you lived in Roman times. You might join a collegium--a society, usually with both a joining fee and a maintenance fee, that existed for the benefit of its members. Of course, little could be done for you if you became seriously ill. But when you died, your collegium would ensure that you had a decent burial.

Collegia were precursors to the medieval guilds, which operated along similar principles. Like-minded people, sharing a craft, profession, or religion, formed a guild. Guilds influenced the politics of town life and the prices of goods, but one personal benefit of belonging to a guild was that if you died, your guild would bury you and take care of your family.

Are you seeing a trend here? Health insurance was not a concern, because medicine was not very advanced. People who became seriously ill in ancient or medieval times were more likely to die than recover. So, collegia and guilds basically offered burial insurance, not health insurance.

Now fast-forward a few hundred years to the end of the 19th century. Medical knowledge had advanced, but if you fell ill, you were almost certain to be cared for at home by your family. In the United States and Europe, most people still lived on farms. There was no way to contact a doctor, no local hospital, and probably still no cure for your illness. In 1900, the average life expectancy in the United States was only 47 years.

But the world was modernizing. By the turn of the century, the telephone and the automobile had been invented. People were moving from farm to town and from town to city. This meant more people had access to doctors and even hospitals, which were improving rapidly.

In 1904, the American Medical Association created the Council of Medical Education to standardize medical school admission and to ensure that medical training was uniform, including two years of clinical rotation at a teaching hospital. By the 1910s, state licensing boards were also enforcing regulations. American doctors were starting to professionalize.

Even so, your biggest worry around the turn of the century was not the bill from your doctor. It was your lost wages from missing work due to illness. So, after 1890, there was a growing demand for "sickness" insurance. It wouldn't pay your doctor's fee, which was still low, but it would pay some of your lost wages if you were laid up. By 1911, the employees of Montgomery Ward had joined the first group "sickness" plan.

Before too long, progressives--including former president Theodore Roosevelt--sounded the call for national insurance. In 1912, Roosevelt ran for a third (non-consecutive) presidential term on the Progressive, or "Bull Moose," ticket. At the Progressive National Convention, he said, "the hazards of sickness, accident, invalidism, involuntary unemployment, and old age should be provided for through insurance."

The official Progressive platform called for "the protection of home life against the hazards of sickness, irregular employment, and old age through the adoption of a system of social insurance adapted to American use." But obviously, it did not come to pass. Roosevelt lost the election to Woodrow Wilson, and World War I put warfare ahead of health care.

--Rebecca Bigelow

The Start of Modern Health Insurance
It wasn't until medical innovations really took off, after World War I, that health insurance became a major concern. Before that, most people had little access to doctors and hospitals, and most doctors and hospitals could do little to help you if you were seriously ill.

But in the 1920s, scientists developed insulin to control diabetes (formerly a death sentence), found vaccinations for diphtheria and tuberculosis (two 19th-century scourges), and, perhaps most important of all, discovered penicillin (although it was not widely used until the 1940s). Suddenly, if you were sick, you had a fighting chance to recover.

Of course, with more cures came more costs, and with more costs came more demand for health insurance. So, in 1929, teachers in Dallas, Texas, made an agreement with Baylor University Hospital. The 1,500 teachers would pay 50 cents a month to the hospital. In return, if they needed hospital care, Baylor would provide up to 21 days of hospitalization.

With the Great Depression causing hospital receipts to plummet, other hospitals soon saw the wisdom of a steady source of income. They began offering similar programs to other groups of employees. This was the beginning of Blue Cross coverage, and it permanently changed how Americans paid for their health care.

In the 1930s, doctors wanted the benefits of a steady income, too. They were also increasingly alarmed at the growing cry for government health insurance. So, in 1939, the California Physicians' Service began marketing the first prepaid coverage for physician services. The program, which would eventually become Blue Shield, cost $1.70 a month. In the first year of the plan, more than 20,000 Californians subscribed.

Despite the creation of Blue Cross and Blue Shield and some early HMO plans, most Americans remained uninsured, and a new push for national health insurance--led by a new Roosevelt--began. As president during the Great Depression, Franklin Delano Roosevelt pushed through many social programs. But attempts in 1935 and 1939 to create national health insurance both failed in congressional committee.

By 1939, World War II had begun, and health care once again seemed less important than warfare. Yet America's entry into the war did change health care significantly--when, in 1942, the U.S. government passed the Stabilization Act to keep workers' wages stable.

The act limited wage increases, so that no one employer could outbid all others for the limited number of civilian employees. But it did not preclude employers from offering health insurance to prospective employees. Employers, quickly realizing that decent health insurance could be a real incentive for an employee to accept one job over another, began offering health insurance coverage.

A series of government rulings soon solidified the role of employment-based health insurance in the United States. In 1945, the National War Labor Board ruled that companies could not change insurance terms in the middle of the contract period. This meant that once insurance was offered for the year, the company could not drop or lower the coverage.

In 1949, the National Labor Relations Board ruled that insurance was part of wages. As such, it could be included in union contract negotiations. Finally, in 1954, the Internal Revenue Service sealed the deal. It ruled that health insurance payments were not taxable income. By 1960, private health insurance covered about 140 million Americans (around 75 percent of the population), and the majority of these people were insured through their workplace.

Today, employment-based health insurance is still the main way Americans under age 65 get their health care coverage, but the numbers are declining. Between 2000 and 2008, fewer Americans had employment-based insurance each year. In 2000, approximately 63 percent had insurance through their job. By 2008, that number had dropped to 58.5 percent.

--Rebecca Bigelow

History of Medicare and Medicaid

How Did Medicare and Medicaid Get Started?

In the first half of the 20th century, there were several failed attempts to create a national health insurance system in the United States. But the first government-run health insurance programs, Medicare and Medicaid, didn't pass Congress until 1965--and even then they were controversial.

Theodore Roosevelt, running for president on a progressive platform, first called for some form of national health insurance in 1912. Two decades later, during the Great Depression, progressives under Franklin Delano Roosevelt called for it again--as part of the newly proposed Social Security system. But ultimately, all health insurance provisions were dropped from the bill to get Social Security passed in 1935.

Some form of national health insurance certainly fit within Roosevelt's notion of "social security." In fact, in 1944, he actually called for "a second Bill of Rights" during his State of the Union address. This "economic Bill of Rights" would include "the right to adequate medical care." But Roosevelt died in office in 1945, before he could take any action.

Harry Truman became president after Roosevelt and called for that action. Before long, there was a bill to add national health insurance to Social Security, and it had Truman's active support. But a House subcommittee called the plan a communist plot, and the American Medical Association (AMA) called it "socialized medicine." With the rise of the Cold War and fear of communism, the bill was soundly defeated.

After that, proponents of national health insurance, realizing that a universal plan had little chance of passing Congress, began attempting incremental reform. In 1960, Congress passed the Kerr-Mills Act to help the elderly cover medical expenses. It was federally funded, but each state had to tell the government who was eligible, because recipients had to be below a certain income and meet other requirements.

Emboldened, President John F. Kennedy pushed for a broader plan, and Congress responded with a plan to cover all seniors without a means test, funded through Social Security. The AMA was once again opposed and hired Ronald Reagan to be its spokesman for "Operation Coffee Cup."

In a 1961 record made for the AMA, Reagan said, "One of the traditional methods of imposing statism or socialism on a people has been by way of medicine. It's very easy to disguise a medical program as a humanitarian project." Kennedy went on TV to argue the opposite, but the bill went down to defeat.

Finally, in 1965, when half of senior citizens were without health insurance, Congress and President Lyndon Johnson proposed a national health insurance plan for the elderly that would reimburse hospitals and doctors for their "usual and customary" fee. At the same time, it proposed a joint state-federal plan that would provide medical care for the poor.

After much debate, the legislation passed--as the Social Security Act of 1965. It made two amendments to the original Social Security Act. Title 18 included two parts. Part A provided compulsory hospital insurance to all seniors. Part B provided them with supplemental medical insurance. Together, these were known as Medicare.

Title 19 provided grants to voluntarily participating states to cover medical insurance for families living in poverty in that state. Each state would oversee its own program and choose how the program met the federal requirements for funding. This joint federal-state plan was called Medicaid.

Today, as of 2009, 35.3 million seniors (and 7.7 million disabled people) are enrolled in Medicare. About 42.6 million people are enrolled in Medicaid, more than half of whom are children. All told, 85.6 million people get coverage in these programs.

--Rebecca Bigelow

Medicare and the Neo-Cons
We know there will be bumps in the road…It's a new program... This is going very well." These were the words of the spokesmen for the Center for Medicare regarding their new Medicare programs. By all accounts it seems obvious that the neo-cons are incapable of governing. Everything they touch is tainted with incompetence. But, in fairness I wondered, is this is just the way governments function. An article by Jonathan Cohn, the senior editor of the New Republic, which is certainly no liberal publication, provides a clue. It points out that when the Medicare programs of the Johnson administration began everything went quite smoothly.

There were concerns about the program, since after all this was new to everyone, and the problems were many including what might happen in the segregated south. Guess what? Hundreds of thousands of people went to the hospital and everything worked. "There were no crises that I remember," said Yale University professor, Theodore Marmor. He is backed up by newspaper accounts of the day. "Medicare Takes Over Easily," said the New York Post calling it as "undramatic as a bed change." Three weeks later the New York Times reported, "Medicare's Start Has Been Smooth."

So what is the difference in the administrations? Let's start with the fact that the program was set up to make money for corporations. Next, let us look at the man who used to run the program Tom Scully who became a lobbyist immediately after the bill passed. Who was he working for? It does not seem to be the public. Stanford McClellan, who like the famous Brownie, has no experience in implementing social-insurance programs, replaced him. So either they were concerned with themselves, as Scully was, or they did not have the necessary experience.

So who implemented the "Great Society" program? President Johnson picked Robert Ball who had been in government since 1939. He was a professional who knew the ins and outs of government and the potential problems that might arise. He urged that the programs begin in the summer when the hospital are the least crowded. It makes sense to me! So LBJ chose a pro and the neo-cons, in their arrogance, feel everything that has gone on before them is wrong. Would you, I ask, hire someone who has no experience to fix your car?

Another difference, and this comes from experience as well, was that the LBJ team drew up plans in case things did not go well. There, as I see it, is one of the big differences. The Bush team refuses to even acknowledge there could be problems. Remember the Dick Cheney statement that we will be welcomed as liberators in Iraq. That, I say, is but one example of many where the Bush the team had not set up a proper game plan. They seem to be arrogant in their stupidity and were warned about this so their failure to have back up plans is an act of gross negligence.

Robert Ball who managed the LBJ program said about the Bush program. "I would not have dreamed of going into this in a way that meant individuals had to choose from all these possibilities. I would have expected chaos." Obviously, Ball was right and it makes you wonder if anyone ever spoke to this man about the possible problems. History is important because you can go back and see if things had to be the way they are and history illustrates to us that they do not.

Sources, Jonathan Cohn, The New Republic

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