The concept of health insurance was proposed in 1694 by Hugh, the elder Chamberlen from the Peter Chamberlen family. In the late 19th century, “accident insurance” began to be available, which operated much like modern disability insurance. The first insurance plans began during the Civil War (1861-1865). The earliest ones only offered coverage against accidents related from travel by rail or steamboat. The plans did, however, pave the way for more comprehensive plans covering all illnesses and injuries. The first group policy giving comprehensive benefits was offered by Massachusetts Health Insurance of Boston in 1847. Insurance companies issued the first individual disability and illness policies in about 1890.
In 1929, the first modern group health insurance plan was formed. A group of teachers in Dallas, Texas, contracted with Baylor Hospital for room, board, and medical services in exchange for a monthly fee. Several large life insurance companies entered the health insurance field in the 1930’s and 1940’s as the popularity of health insurance increased. In 1932 nonprofit organizations called Blue Cross or Blue Shield first offered group health plans and they involved discounted contracts negotiated with doctors and hospitals. In return for promises of increased volume and prompt payment, providers gave discounts to the Blue Cross and Shield plans.
Government programs to cover health care costs began to expand during the 1950s and 1960s. Disability benefits were included in social security coverage for the first time in 1954. When the government created Medicare and Medicaid programs in 1965, private sources still paid 75 percent of all of the health care costs. By 1995, individuals and companies only paid for about half of the health care with the government responsible for the other half. During the 1980’s and 1990’s, the cost of health care rose rapidly and the majority of employer-sponsored group insurance plans switched from “fee-for-service” plans to the cheaper “managed care plans.”
It would be wise for all people to check their insurance benefits, make sure that their policies serve their needs, and simultaneously shop for the best plans as they also try to select the best doctors.