Private Health Insurance History

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Pages: 2

Several historical factors that led to the development of the private health insurance industry include the industrialization of the west land, the Baylor University Hospital experiment of medical benefits, the Stabilization Act of 1942 during World War II and the Health Maintenance Organization Act of 1973.

Private Health insurance was first implemented in 1847 mainly as an accidental insurance and primarily serving companies of the railroad industry. The Southern Pacific, the Northern Pacific and the Missouri Pacific all organized hospital associations to care for their 500,000 employees. The companies provided total care in return for a periodic fixed payroll deduction (Reed, L. 1965, pg3). As the west grew, logging, metal mining and coal industries chose the same type plans to cover employees. By 1930, about 540,000 employees were receiving employee deductions for medical services (Reed, L., 1965, p 1).
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The plan was considered an experiment and each participant received 3 weeks worth of medical care for $3 a semester or $6 a year. The health plan delivery was successful and other groups then requested insurance. During the depression, other hospitals had a large amount of patients unable to pay for services and they began to recognize the benefit of prepaid services and started similar plans. Community hospitals began to offer joint plans that provided medical coverage at more than one location. Later plans were set up to serve a community or large city, and by the end of 1934, 54,000 people were covered by 1 of the 10 different available health insurance plans. Baylor health plans later became not-for-profit Blue