President | Founder, CLM Insurance Group, Delray Beach, FL
The original purpose of health insurance stands to be the same as it is today's. Protect against financial loss in the event of an unexpected illness or accident. The core of health insurance has never changed. Obviously, plans, carriers, rates, access and networks have changed, but that is to be expected in any industry inside a capitalist society.
For more information on today's health insurance landscape visit www.clminsure.com or call 561-320-2978
A great question and one that the answer for allows us to contrast how a product or service can evolve over time into something quite different from it's original concept. Over a century ago health insurance was introduced as a financial protection against serious injury or illness. At that time and for decades after, the state of the medical arts was such that there was little your doctor or local hospital could do to deal with your cancer or heart attack other than dull the pain. People's life expectancies were much shorter than today and a whole host of medical conditions we recognize and treat in the 21st century were unrecognized or untreatable.
Wage and price controls imposed by the Roosevelt administration during WWII became the catalyst for wide spread employer based health insurance as employee benefits were not subject to these government controls and offering benefits gave employers a recruitment advantage in the labor force short marketplace of that era. This practice continued and expanded along with the American economy in the post war era and became institutionalized.
What has changed in our lifetimes have been the advances in health care, the things that we now consider as being healthcare (do you ever wonder how our ancestors who were dealing with wars, attacks by native Americans, droughts & floods dealt with stress and depression before we had a pill for everything?), the fact that we live much longer and the introduction of government programs such as Medicare and Medicaid which expanded access to health care while at the same time introducing pricing distortions in the health care marketplace. These government programs, no matter how noble their intent, have never paid market rates for health care and set in motion the cost shifting process by medical providers of inflating their charges for those in private health insurance. Since the late 70's health insurance has evolved from just protection against catastrophic loss into much more of an ongoing maintenance contract that covers more and more of the routine areas of health care people once paid for themselves. Kind of like buying a car and having all the oil changes & tire rotations included for "free", they're not really free but are buried into the higher cost you are paying for the car.
So, that is how the health insurance concept originated and the story of how it has morphed into the major social and political issue our nation is struggling with today.
Co-Founder, TermInsuranceBrokers.com, Goldenzweig Financial Group, Las Vegas, Nevada
The purpose of health insurance originates in the same concept as for any type of insurance - to protect yourself financially in the event of a catastrophic event by pooling the risk and shifting it to a third party (the insurance company). In return for a monthly premium, the insurance company will absorb the risk of incurring a massive expense should something happen to the insured individual - if something does happen, they would the financial hit instead of you.
In the case of health insurance, a catastrophic event can be many things - a good example is having a surgery performed. A given surgery could cost $100,000 or more. Your average person could not afford to write that check.
If you have any other questions about health insurance, send me a message by clicking on the "contact me" button.
Health insurance can trace its roots back to the 1920's in the US. The first health insurance was introduced in Texas to offset the costs of hospital stays. Blue Cross was founded specifically for this purpose. Several years later, Blue Shield was added to help offset doctor's charges. As technological advances in the medical field particularly after WWII, costs rose rapidly. The idea of managed care was advanced with the purpose that if people would regularly schedule appointments to doctors, they could determine high risks much faster and avoid large hospital costs. In the 1970's, the HMO (Health Maintenance Org) gained favor and under President Nixon a bill was passed that would require employers with greater than 25 employees to offer coverage through an HMO. By the early 1990's, the demand for the flexibility of a traditional plans in addition to the cost saving of the HMO plans, brought us the PPO and the POS. Doctor Office Visit copays and prescription drug copays became the norm. The number of laws governing healthcare and what policies were required to pay increased nearly 1000%. Technological advances were happening at a "break-neck" pace. With each law requiring more health issues to be covered and the advances in technology, ultimately caused premiums to increase dramatically. In 1993, in TN, a $1000 deductible for a 35 year old male was $41 per month. How things have changed! The government's answer was to fix the financing mechanism, concluding that they could control costs by forcing the financing (aka insurance companies) to follow strict regulations. Sounds great except:- insurance companies were required to minimize the amounts they paid doctors, hospitals, etc (providers); while providers were having to serve twice as many patients for the same money and go into $100k plus in debt just to get through med school. Can you say train wreck? Which brings us to where we are today!
That maybe a bit more than you asked in questioning the original purpose of health insurance, which in simple terms, was set up to exchange premium for the possibility of an expensive hospital stay in the future.
.JPG){kind=avatar}
For more information on today's health insurance landscape visit www.clminsure.com or call 561-320-2978
Wage and price controls imposed by the Roosevelt administration during WWII became the catalyst for wide spread employer based health insurance as employee benefits were not subject to these government controls and offering benefits gave employers a recruitment advantage in the labor force short marketplace of that era. This practice continued and expanded along with the American economy in the post war era and became institutionalized.
What has changed in our lifetimes have been the advances in health care, the things that we now consider as being healthcare (do you ever wonder how our ancestors who were dealing with wars, attacks by native Americans, droughts & floods dealt with stress and depression before we had a pill for everything?), the fact that we live much longer and the introduction of government programs such as Medicare and Medicaid which expanded access to health care while at the same time introducing pricing distortions in the health care marketplace. These government programs, no matter how noble their intent, have never paid market rates for health care and set in motion the cost shifting process by medical providers of inflating their charges for those in private health insurance. Since the late 70's health insurance has evolved from just protection against catastrophic loss into much more of an ongoing maintenance contract that covers more and more of the routine areas of health care people once paid for themselves. Kind of like buying a car and having all the oil changes & tire rotations included for "free", they're not really free but are buried into the higher cost you are paying for the car.
So, that is how the health insurance concept originated and the story of how it has morphed into the major social and political issue our nation is struggling with today.
In the case of health insurance, a catastrophic event can be many things - a good example is having a surgery performed. A given surgery could cost $100,000 or more. Your average person could not afford to write that check.
If you have any other questions about health insurance, send me a message by clicking on the "contact me" button.
That maybe a bit more than you asked in questioning the original purpose of health insurance, which in simple terms, was set up to exchange premium for the possibility of an expensive hospital stay in the future.