Employer’s and Group Health Insurance News
How did this relationship start?
Have you ever wondered how the whole private health insurance program started? Who started it and how did employer’s become so involved? If so, let’s take a trip back to the past. And note, these are not the type stories you will hear or read in current health insurance news articles.
The earliest record of offered insurance coverage was during the Civil War (1861 – 1865). These early offerings only covered accidents related to traveling by rail or steamboat. These plans did, however, pave the way for more comprehensive plans that included illnesses and injuries.
The first group policy was offered by Massachusetts Health Insurance of Boston in 1847 and the first individual policies were not issued until 43 years later, in 1890. You may have thought individual policies came first, but no, it was group policies! These individual policies included disability and illness protection for the policy holder.
Flash forward to 1929 when the first modern group health insurance plan was formed by a group of teachers in Dallas, Texas. These teachers contracted with Baylor Hospital for room, board, and medical services in exchange for a monthly fee.
The 1930’s and 1940’s saw an increase in popularity of health insurance and several large life insurance companies entered the health insurance field. It was in 1932 that Blue Cross and Blue Shield first offered group insurance policies. The Blue Cross and Blue Shield policies were very popular and successful because they involved discounted contracts that were negotiated with doctors and hospitals. (Their method of operation hasn’t changed much, has it?) Blue Cross and Blue Shield offered an increased base of patients for the doctors and hospitals and the providers offered discount fees to Blue Cross and Blue Shield policy holders.
Wartime (1939-1945) wage freezes imposed by the government accelerated the spread of group health care. By law, employers were unable to attract workers with increased wages, so they had to improve their benefit packages by adding health care as an incentive. Strong worker’s unions were also bargaining for stronger benefit packages including, tax-free, employer-sponsored health insurance.
As you can see in this brief history lesson, the practices set forth in the 1940’s are very similar to the modern day practices of group health insurance and employer benefit packages. Employer’s are still in competition with each other for the best employees, insurance companies are still negotiating contracts, and group insurance is usually the most attractive option for many people.
