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History and Evolution of Health Insurance

The campaign for some form of universal government-funded health care has stretched for nearly a century in the U.S. and, on several occasions, advocates believed they were on the verge of success; yet, each time they faced defeat. The evolution of these efforts and the reasons for their failure make for an intriguing lesson in American history, ideology, and character.

Other developed countries have had some form of social insurance for nearly as long the U.S. has been trying to get it. Some European countries started with compulsory sickness insurance, one of the first systems, for workers beginning in Germany in 1883. Other European countries, including Sweden in 1891 and others subsidized the mutual benefit societies that workers formed among themselves. So, for a very long time, other countries have had some form of universal health care, or at least the beginnings of it. The primary reason for the emergence of these programs in Europe was income stabilization and protection against the wage loss of sickness rather than payment for medical expenses, which came later.

The government took no voluntary actions to subsidize funds or make sick insurance compulsory. The U.S. did have some funds that provided for their members in the case of sickness or death, but there were no legislative or public programs during the late 19th or 20th century. In the Progressive Era, which occurred in the early 20th century, reformers were working to improve social conditions for the working class. However, unlike European countries, there was not powerful working class support for broad social insurance in the U.S. The labor and socialist parties' support for health insurance or sickness funds and benefits programs was much more fragmented than in Europe. Therefore the first proposals for health insurance in the U.S. did not come into political debate under anti-socialists sponsorship as they had in Europe.

President Theodore Roosevelt was in power and although he supported health insurance e because he believed that no country could be strong whose people were sick and poor, most of the initiative for reform took place outside of government. In 1914, reformers sought to involve physicians in formulating the American Association of Labor Legislation bill, to pay the sick, maternity benefits and a death benefit of fifty dollars to pay for funeral expenses. The American Medical Association actually supported the AALL proposal. The commercial insurance industry, however, opposed the reformers' efforts in the early 20th century. There was great fear among the working class of what they called a "pauper's burial", so the backbone of insurance business was policies for working class families that paid death benefits and covered funeral expenses.

Next came the Committee on the Cost of Medical Care (CCMC). Concerns over the cost and distribution of medical care led to the formation of the self-created, privately funded group. The CCMC recommended that more national resources go to medical care and saw health insurance as a means to covering these costs. Predictably, the AMA undertook a massive campaign to portray a government insurance plan as a threat to patient-doctor relationship. The AMA introduced the "eldercare plan" which was voluntary insurance with broader benefits and physician services. In response, the government expanded its proposed legislation to cover physician services, and what cam e of it were Medicare and Medicaid. The necessary political compromises and private concessions to the doctors, hospitals and to the Republicans created a 3-part plan, including the Democratic proposal for comprehensive health insurance (Part "A") the revised Republican program of government subsidized voluntary physician insurance (PART"B") and Medicaid. Finally, in 1965, Johnson signs it into law as part of his Great Society Legislation, capping 20 years of congressional debate.