The History of US Health Insurance

Health insurance in America has a long history. Health insurance policies date back to the mid-1800s. The first insurance plans were introduced during the Civil War and offered coverage against accidents caused during travel by rail or steamboat. These plans laid the groundwork for the future of what we know today as health insurance policies.

The Beginnings of What We Know Today as a Health Insurance Policy

The first group health insurance policy was offered by Massachusetts Health Insurance of Boston in 1847. By 1890, more insurance companies followed suit and offered illness coverage. In 1929, the first modern group health insurance plan was formed. A group of teachers in Dallas, Texas, formed an agreement with Baylor Hospital to pay a set fee for beds and medical services, thus introducing the fee-for service model.

Many large life insurance companies began offering health insurance policies in the 1930s and 1940s as the demand of health insurance increased. In 1932, Blue Cross/Blue Shield first offered group health plans that negotiated discounted fees from doctors and hospitals to larger groups of individuals.

The Evolution of Health Insurance in the Twentieth Century

Employee benefit plans were conceived in the 1940s and 1950s. Workers unions began negotiating for health insurance plans for their members. During World War II, employers improved their benefits packages, adding health care to entice employees when they could not offer increased wages.

Government programs to cover health care costs were created in the 1950s and 1960s. When Medicare and Medicaid programs were created in 1965, the majority of Americans were still paying for their own health care costs. By 1995, individuals and companies only paid for about half of the health care, while Medicare and Medicaid covered the other half.

During the 1980s and 1990s, with the rise of health care costs in America, many employers switched over to the newer managed care plans. By the mid-1990s, most Americans with health insurance were enrolled in some type of managed care plan.