History Of Health Insurance


 

In my continuing efforts to be the number one source of online health insurance, I have found many people wondering how we arrived where we are today in terms of the current American Health Care System.  I would say that the current system of rules and regulations that seem to protect only the health insurance companies and not the individual are as a direct result of corporate and political malfeseance.  The very fact that I am a health insurance broker and can make a living selling health insurance is ironic, as the very idea to me is sickening. I provide you the right to buy access to health care, and if you can’t afford it or are too sick to qualify then I must move on to the next case.

That is the foundation of East Coast Health Insurance, and the fact that we believe health insurance is a right not a privilege, and we vow to never turn anyone away.

In any case, a brief overview of the history of the current system of health care and health insurance will inevitably lead us back to the beginning of medicine.  But in the interest of relevance, I am only going focus on the United States as we have, by far, the most backwards system on earth.

Private health insurance began in the United States as a result of the Great Depression. Hospitals and physicians were not getting properly compensated, and as a direct result of the Depression many hospitals and providers started Health Insurance Coststo toy with the idea of insurance. Though, it must be stated clearly that these were catastrophic plans by and large, and did not offer copayments and fee schedules for office visits.

Most physicians challenged the basis of the modern managed care system, as they were concerned that the potential loss of their revenues due to the inability to price discriminate among patients with varying needs of care.  Thus, the growth of the health insurance industry over the mid 20th century was driven by employers and the health plans that the large companies offered their workers to deal with the unions, and collective bargaining power of their employees.

Health Insurance

These employer based plans where the employer underwrote the policy were the forerunners, and many indeed subsequently became private insurers themselves. But the main reason for the success of the commercial health insurers was due to something called experience rating, which is the fundamental principle of healthier groups receiving lower premiums based on experience.

Medicare soon followed in 1965 as an insurance program to protect the senior population.  The current defacto Medicare program is an offshoot of what the private health insurance companies were doing in this time period of the 1960′s.  The allowable cost reimbursement system is actually straight from the Blue Cross and Blue Shield plans in something called allowable cost-based reimbursement.

Eventually, the Employee Retirement Income Security Act (ERISA) was passed in 1974, which led to the growth of self insured employer health plans and all but guaranteed competition in the risk-bearing segment of the conventional insurance market.

The Employee Retirement Income Security Act of 1974 (ERISA) (Pub.L. 93-406, 88 Stat. 829, enacted September 2, 1974) is an American federal statute that establishes minimum standards for pension plans in private industry and provides for extensive rules on the federal income tax effects of transactions associated with employee benefit plans. ERISA was enacted to protect the interests of employee benefit plan participants and their beneficiaries by requiring the disclosure to them of financial and other information concerning the plan; by establishing standards of conduct for plan fiduciaries; and by providing for appropriate remedies and access to the federal courts.

Managed Care growth in the 1980′s and 90′s was in response to the introduction of selective contracting which resulted from the ever-present rising health care costs.  This selective contracting model (for physicians and providers) introduced more competition into the market at the behest of President Nixon.

Eventual consolidation amongst the health insurance companies was inevitable and still goes on today.  This consolidation allowed for behemoth health insurance companies, which of course, by nature decrease competition and undercut the ability of managed care plans to selectively contract.

The final major act was the introduction of the Health Savings Account in the 2000′s by President Bush, which effectively help the upper classes write off additional income through higher deductibles, and in my opinion, discriminate even further against the lower and middle class who usually can’t afford to enjoy these tax incentives.

So, yes, I skipped over the Blue Cross Blue Shield history which can be found on our Blue Cross Blue Shield section and many other important events in favor of a quick overview of the major events that led us to the point where we are at now.  A sort of Zero Hour, where if something isn’t done to correct the list of errors that this history demonstrates, then we are, of course, doomed as a society. You can make several important distinctions about a society and their place in history by the way that society takes care of its poor and its middle class.  If so, and the analogy holds up, we have failed miserably as both a society and as an economy.

My hat goes off to our political leaders who continue to make decisions that either fiscally reward themselves, or help them get reelected.  This is par for the course, however, and I am not taking my hat off for that, but rather the fact that we have the most failed health care system ever, in that it is the most expensive with the most sub par results.  Of course, if you are rich then you will continue to believe that we have the greatest system and good luck to you in that belief, but if health care costs continue to rise you will not be able to enjoy that standard of care infinitely.

Jeremy Ehrenthal

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