history of health insurance

History of Health Insurance

History of health insurance

The History of Health Insurance in this country dates back to 1798 with the first government health plan. In that year Congress established the US Marine Hospital service for the seamen. It was funded by deductions from their pay and it was mandatory.

Employers in some industries started to offer health insurance when they developed industry specific clinics. These plans would prepay the doctors fixed monthly fees to provide care for common illnesses and accidents related to their industry.

Private health insurance started to be offered beginning in 1899. Aetna Life Insurance Co. and Travelers Insurance Co. started to offer plans that would cover temporary total disability caused by disease. There were a few exceptions such as TB, VD, Insanity as well as alcohol or drug abuse. By 1908 these exceptions no longer applied.

Here are some other notable dates

1932  First private hospital coverage plan, Blue Cross Hospital (Sacramento, CA)

1940 – 1949 Commercial insurance companies enter the health market based on the idea that the insured are employed and thus likely to be young and healthy.

1948 All states now have some form of workmen’s compensation

1949 – Liberty Mutual introduces Major Medical Insurance to protect individuals against extended illnesses or injuries by expanding basic plans’

1950 Life expectancy in the United States: 68 years.

1957 Vision care benefits are introduced.

1959 Dental care benefits are introduced.

1960-1970 The Insurance market expanded and there were now over 700 insurance companies.

1965  Medicare passed

1973 Nixon’s Health Maintenance Organization Act was passed. This was supported by Insurance Companies, Doctors, and Hospitals however enrollment was slow.

1974 Employee Retirement Income Security Act (ERISA) was passed

By 1980 Health care spending was three times higher than in 1970 and by 1990 these costs rise at twice the inflation rate. In the 90’s the demand for managed care rises. By 2000 health care spending reaches $1.2 trillion up from the $257 billion in 1980.  Costs and spending continue to rise.

Around 2005 – Health Spending Accounts that are tax sheltered started. Also, around that time through mergers of insurance companies there were now 3 for-profit and 2 non-profit plans that controlled 90% of the market.

In 2010 The Patient Protection and Affordable Care Act was passed.


The history of health insurance shows us that there have been a lot of changes in the health care and health insurance industry that have led us to where we are today.  In today’s market it is important that you have the coverage that fits you and family’s needs both health care wise and budget wise.  Contact us today and we can review your policy.