The History of Health Insurance

The History of Health Insurance


The History Of Health Insurance

Cindy Smith

NUR 391 / December 13, 2008

University of Phoenix

In this essay I will explore the evolution of American healthcare from the 1900’s. Primarily I will discuss the impact of the insurance evolution on our current healthcare delivery system.

The Evolution Of The Healthcare Delivery System
This paper will explore the evolution of the healthcare delivery system in the U.S from the early 1900’s to current. I will outline the two-party payor system and the effect that the Depression had on that system, the evolution of the third-party payor systems both public and private and their effect on current healthcare costs and delivery.
Prior to 1920 medical technology was very rudimentary and the cost very low. Families were primarily concerned, not so much with the cost of medical treatment but rather the wages which were lost when a disabling illness occurred. Wages lost were four times that of the cost of the medical services to treat the illness (Thomasson, 2003). Insurance focused on lost wages rather than medical treatment. Medical treatment was two-party. An individual would pay his or her physician and hospital directly. Physicians had direct relationships with their patients and medical care was given primarily in the home. Patients were expected to pay only what they could afford and offered little security for physicians and patients (Radich, 2006).
In 1929 during the economic upheaval of the Great Depression hospitals became financially unstable. Massive job losses and business closures meant families could not afford to pay for healthcare. Hospital admissions declined and physician incomes were hit hard. It was a time of severe financial hardship for most of the country. Only 62% of private hospital beds were occupied and the American Hospital Association (AHA) began to look for solutions to the economic down-turn. In...

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