Understanding one requires a knowledge of the other. Health insurance is a way to protect your future finances by paying monthly investments to an insurance company. When you need health care, the insurer covers all or part of the cost, depending on your plan.
In America, health insurance has evolved from non-existent to a luxury to an employer-provided benefit to a requirement. Insurance typically comes in two forms: public and private. Your employer may pay for private plans, or you can purchase the coverage directly from an insurer. Most Americans carry a form of private coverage. Meanwhile, the government subsidizes public plans for certain groups of people — Medicaid covers low-income individuals while Medicare covers the elderly.
Today, the number of uninsured in the United States has declined for the first time since In , the number of uninsured was 44 million.
After the Affordable Care Act required all Americans to carry insurance in , the uninsured number dropped by almost half to 28 million Americans. Then, the U. Initially, people paid what they could for professional health care, which often meant people went without, seeking care only in life-or-death situations.
The avoidance of hospitals came from their poor reputation. Hospitals improved in their care and success rates, especially with the introduction of sanitation measures and antibiotics. The earliest inklings of what would evolve into health insurance appeared in lumber companies in Washington state in the s.
At the time, the companies paid a pair of doctors to offer care to their employees. Hospitals in Texas banded together in to create a means of helping patients pay for care. This first health insurance, Blue Cross, helped cover the costs of a hospital stay. Dallas-area teachers were some of the first to benefit from hospital expense coverage in return for a cent monthly premium.
Eventually, the idea caught on with the local media and spread through the north Texas area until three million people were members of Blue Cross in The insurance allowed teachers and other earners of modest incomes a means of avoiding bankruptcy if they required medical care.
In California, another group sought to solve this problem by creating Blue Shield to cover doctor visits. In , the two merged to become the insurance company Blue Cross Blue Shield, which still operates today. During the s, innovations in medicine meant hospitals could save lives that would have been lost in the past. These discoveries, such as intravenous anesthetic also increased the costs of care. The demand for insurance that would pay for the higher costs was soon to increase dramatically.
During the Great Depression, people scrimped any way they could, including by cutting out pricey hospital stays. Despite the widespread availability of Blue Cross in most states in the country, it remained unpopular in an economy where people cut out extra costs as much as possible. When World War II broke out, American men flocked to enlist in droves, but those who stayed behind needed jobs, mainly to fuel the manufacturing machine of the war.
To encourage people in the smaller workforce to come work for certain factories, the owners began offering incentives, such as health insurance with the jobs. A law passed in froze wages , preventing companies from using higher salaries to attract workers.
In , the Internal Revenue Service changes how it treated health insurance benefits from employers. Now, they were tax-free. Later, in , additional laws made getting health insurance from an employer even better on tax rolls. In fact, the numbers showed how many people took advantage of the new regulations. In , only nine percent of those in the United States had health coverage , but by , this number ballooned up to 63 percent of the country.
Another leap in medical advancements during the s, such as the Polio vaccine, doubled the cost of care from a hospital. The higher prices made insurance even more of a requirement, but those who did not have employer-provided insurance found themselves in positions where affording coverage was difficult. To help the elderly and indigent afford health care, President Johnson signed Medicaid and Medicare into law in the s.
Under President Nixon, health maintenance organizations HMOs became the new name for group health plans. Both of these plan types are still available today, in addition to variations on them.
Today, many Americans expect health insurance benefits with their jobs. The United States is the sole country on Earth with such a reliance on employer-provided health coverage. The precursor to Aetna started as a life insurance company, which specialized in fire insurance , in the s. Through multiple acquisitions, including the purchase of Prudential HealthCare, Aetna became one of the largest and most well-known providers of health benefits in the U.
Today, health insurance is a billion-dollar industry and healthcare expenditures are in the trillions. These industries are expected to continue to grow. With the boom of healthcare costs, it is becoming more and more important that your students have access to a competitive health insurance plan. Notice of Data Security Incident. Skip to content. In the simplest terms, insurance is protection from a risk in exchange for some form of payment. About Our supporters Careers.
Our supporters. Health and aged care. Policy makers must grapple with two further questions: Do the current design features of the private health insurance system, including incentives, penalties and regulation, support its desired role as a complement or substitute or both in the overall health system?
And if not, what other mechanisms or combination of arrangements are needed? Does government support for private health insurance and private hospital care promote overall economic efficiency and the most effective and equitable use of government and community resources?
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