Health Insurance. The history of health insurance in America is largely a twentieth‐century story. Well beyond 1900, paying for medical care, with few exceptions, remained a private activity between patients and their physicians and
hospitals. Widespread interest in sickness insurance—as it was originally called—did not develop in the United States until the 1910s, and then attention focused on compulsory, not voluntary, insurance. Inspired by the rapid spread of government‐sponsored sickness‐insurance plans in Europe, the progressive American Association for Labor Legislation in 1912 set up a committee to prepare a model bill for introduction in state legislatures (on the assumption that the U.S.
Constitution prohibited a federal plan). The model bill required the enrollment of most manual laborers earning a hundred dollars a month or less and provided for both income protection and medical care. Although many physicians greeted this plan enthusiastically, sentiment turned against the measure during
World War I, and by 1920, when the
American Medical Association (AMA) formally declared its opposition, the campaign for compulsory health insurance—or socialized medicine, as it was sometimes called—was dead.
The Great Depression, beginning in 1929, again brought health insurance to the fore. As hospital receipts and physician income plummeted, interest in voluntary health insurance grew. In December 1929, the Baylor University Hospital in Dallas, Texas, announced a plan to sell hospitalization policies to the city's school teachers for fifty cents a month. Other hospitals around the country adopted similar plans, and within a few years groups of hospitals were banding together to offer what came to be called Blue Cross insurance. The AMA, which urged Americans “to save for sickness” rather than purchase insurance, initially opposed this development “as being economically unsound, unethical and inimical to the public interests.” In 1937, however, in the face of a renewed push for compulsory health insurance, the AMA finally approved group hospitalization plans—as long as they left the payment of physicians out of the scheme. By this time the AMA was working on a physician‐controlled plan to provide medical (as opposed to hospital) insurance. The resulting medical‐society plans, which started in the Pacific Northwest, took the name Blue Shield. By 1952 over half of all Americans owned some health insurance, and although insurance benefits paid only 15 percent of private expenditures for health care, prepayment plans were being hailed by a presidential commission as “the medical success story of the past fifteen years.”
With voluntary plans failing to protect so many Americans, the perennial debate over compulsory health insurance flared again. Pro‐insurance reformers had been bitterly disappointed when President Franklin Delano
Roosevelt failed to include health insurance in the 1935
Social Security Act. To remedy this omission, the Social Security Board in 1943 drafted a bill to provide health insurance to all persons paying
Social Security taxes, as well as to their families. Despite the strong backing of President Harry S.
Truman, neither this nor subsequent versions were enacted by Congress. The election of a Republican administration in 1952 temporarily ended the debate over compulsory health insurance.
The 1960 election of John F.
Kennedy, a Democrat, revived discussion of the government's responsibility to provide adequate health care for its citizens. Despite strong opposition from organized medicine, Kennedy's successor, Lyndon B.
Johnson, persuaded Congress in 1965 to include health insurance as a Social Security benefit (Medicare) and to provide for the indigent through grants to the states (Medicaid). Ironically, after years of warning that government health insurance would ruin the medical profession financially, physicians found that
Medicare and Medicaid—by bringing in more patients, raising fees, and facilitating bill collecting—greatly increased their income.
The last third of the twentieth century witnessed numerous attempts to solve the twin problems of access to health care and its ever increasing cost. In the private sector the most notable development was the rapid growth of
health maintenance organizations (HMOs) after 1973, when Congress passed the bipartisan HMO Act. By 1990, the California‐based Kaiser Permanente, which had pioneered in developing prepaid group‐practice arrangements, had enrolled more than 6.5 million members. Proposals offered by different advocacy groups ranged from a national health service, on the left, in which medical workers would become salaried employees, to income‐tax credits for the purchase of commercial health insurance, on the right. None of these efforts succeeded, including President Bill
Clinton's ill‐fated health security plan in 1993–1994, which would have covered all Americans through large health‐insurance purchasing cooperatives. Instead, the United States continued its piecemeal response to health‐care coverage, with considerable experimentation occurring at the state level. By the end of the century, nearly 84 percent of Americans enjoyed health‐insurance coverage, but an estimated 44 million remained uninsured, some by choice (over 8 percent of the uninsured earned more than $75,000 annually), most by necessity.
See also
Great Society;
Insurance;
Medicine: From the 1870s to 1945;
Medicine: Since 1945;
New Deal Era, The;
Progressive Era.
Bibliography
Daniel S. Hirshfield , The Lost Reform: The Campaign for Compulsory Health Insurance in the United States from 1932 to 1943, 1970.
Ronald L. Numbers , Almost Persuaded: American Physicians and Compulsory Health Insurance, 1912–1920, 1978.
Monte M. Poen , Harry S. Truman versus the Medical Lobby: The Genesis of Medicare, 1979.
Ronald L. Numbers, ed., Compulsory Health Insurance: The Continuing American Debate, 1982.
Paul Starr , The Social Transformation of American Medicine, 1982.
Robert Cunningham III and and Robert M. Cunningham Jr. , The Blues: A History of the Blue Cross and Blue Shield System, 1997.
Ronald L. Numbers
