Evolution of Healthcare Insurance in the US

Ever been curious how health insurance began?  I began researching to find the origin of modern day health insurance. Here is what I found out. 

1798 - Congress established the US Marine Hospital Service for seamen.  Services at this hospital were funded by mandatory deductions from the salaries of the seamen. 

1847 – Massachusetts Health Insurance of Boston offered a group policy giving comprehensive medical benefits for a monthly or annual premium.

1861 to 1865 – (Civil War Era) Injury and accident coverage was available when traveling by train or steamboat. 

1866 – Sixty organizations were offering accident insurance not limited to train or steamboat travel.

1890 – Organizations began adding sickness coverage to the accident policies. Almost all hospitals were non-profit and founded by religious organizations or the wealthy. 

1900 – Hospitals began charging for services - the beginning of our modern-day hospital systems.

1909 – Railroads began providing employees with medical insurance programs.

1910 - Mail-order retailer, Montgomery Ward, offered what is now considered the nation’s first multi-employee health insurance policy. It paid a total annual benefit of nearly $29.00 to ill or injured employees.

1911 - The first employer-sponsored group disability policy was issued. This disability policy offered to replace wages lost due to an inability to work but did not cover medical expenses.

1918 - In California, a proposal to create a statewide insurance program was placed on a ballot but failed when put to a vote. 

1919 – An Illinois study found citizens lost four times more wages due to sickness than the amount they spent on the illness. People began purchasing “sickness insurance” to replace their wages rather than health insurance to cover costs of medical treatment.

1920 - General Motors contracts with Metropolitan Life to insure 180,000 workers.

1929 - The first modern group health insurance plan was formed in Dallas, Texas when a group of 1500 teachers contracted with Baylor Hospital for room, board, and medical services in exchange for a monthly fee. The first Health Maintenance Organization (HMO) was formed for Los Angeles’ Department of Water and Power employees providing a wide range of health care services at a set rate. The American Hospital Association was created when community hospitals organized with each other to offer hospital coverage and to reduce competition, leading to the formation of Blue Cross. 

1932 – The first private hospital coverage plan, Blue Cross of Sacramento, California offered the choice of healthcare providers and aided in reimbursement to providers for the treatment of low-income patients.    

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