Difference between revisions of "Health insurance" - New World Encyclopedia
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==History and evolution== | ==History and evolution== | ||
| − | Forms of life and disability insurance date back to ancient times. In ancient Greece, benevolent societies were formed to care for individuals families when the income of the breadwinner was lost. Medieval guilds had similar plans. | + | Forms of life and disability insurance date back to ancient times. In ancient Greece, benevolent societies were formed to care for individuals families when the income of the breadwinner was lost. Medieval guilds had similar plans. Many of the first group health insurance plans were an outgrowth of the guild idea. They were mutual insurance companies, like [[cooperatives]], that were owned by the members. As shareholders, members would divide any profits from the company. |
| − | In the 19th century, early health insurance was actually | + | In the 19th century, early health insurance was actually disability insurance. Patients were expected to pay all other health care costs out of their own pockets. During the 20th century, traditional disability insurance evolved into modern health insurance programs. Today, most comprehensive private health insurance programs cover the cost of routine, preventive, and emergency health care procedures, and also most prescription drugs. |
===History of Health Insurance in the United States=== | ===History of Health Insurance in the United States=== | ||
| − | The first | + | The first insurance companies in the United States were mutual companies. The first policy giving health benefits was offered by Massachusetts Health Insurance of Boston in 1847.<ref>[http://www.lieberson.com/en/medical%5Fhistory%5Fand%5Fethics/history/history_of_health_insurance.htm |
| + | The History of Health Insurance in the United States], viewed January 26, 2007.</ref> | ||
| + | The first individual plans in the United States began as a form of [[travel insurance]] to cover the cost if one was injured in an accident on a steamship or railroad. Insurance companies issued the first individual disability and illness policies around 1890. This payment model continued until the 20th century in some jurisdictions (like California), where all laws regulating health insurance actually referred to disability insurance.<ref>See California Insurance Code Section 106 (defining disability insurance).[http://caselaw.lp.findlaw.com/cacodes/ins/100-124.5.html] In 2001, the [[California Legislature]] added subdivision (b), which defines "health insurance" as "an individual or group disability insurance policy that provides coverage for hospital, medical, or surgical benefits."</ref> | ||
| − | + | ===History of Health Insurance in Germany=== | |
| + | State-mandated health insurance began in Germany in 1884, and initially covered workers in various labor unions. Coverage expanded to other parts of the work force, with family members of workers included after 1892. By 1928, practically all workers in Germany making less than 3,600 marks were forced to participate in the system.<ref>Richard M. Ebling [http://www.fff.org/freedom/0294b.asp National Health Insurance and the Welfare State, Part II]. | ||
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| + | Before the First World War, anyone making less than 2,000 marks in the covered occupations was required by law to participate in the insurance scheme. By 1928, all those earning less than 3,600 marks were forced to participate. The insurance funds mandated by the German state were organized on the basis of trades and occupations. But the state continually consolidated them, with the result that, while in 1909 there were 23,000 of such funds, by 1914 they had been reduced to 10,000, and to about 7,400 in 1929. | ||
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| + | The insurance funds were managed by representatives of employers and labor unions in an industry. The government required that at least a sum equal to one and one-half of the average wage in an occupation be contributed to the fund by each firm, with the contribution being split on the basis of two thirds being paid by the employee and one third by the employer. And as a result, worker representatives made up two thirds of the members on the board of each fund. | ||
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| + | Benefits first included thirteen weeks of free medical care and a cash payment equal to fifty percent of the prevailing wage in the pertinent occupation, with the cash benefit starting on the fourth day of an illness. After 1903, free medical care and cash payments were expanded to a period of twenty-six weeks. In case of hospitalization, the cash payment was cut in half. Besides these basic benefits, the compulsory-insurance funds often provided cash benefits equal to seventy-five percent of the worker's pay (depending upon family size), and by the 1920s, these cash payments often started only one day after an illness began. Financial coverage was also extended to include nursing services and convalescent treatment for up to a year after the end of cash benefits. Maternity benefits were mandatory as well. | ||
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| + | The results of German health insurance | ||
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| + | The benefits paid out by the state-mandated health insurance system continuously exceeded contributions received from member employees and employers and required government subsidization. Total contributions received by the health-insurance funds from employers and employees in 1929 was 375 percent larger than they had been in 1913. But health-insurance benefits paid out by the funds in 1929 were 406 percent larger than what was paid out in 1913. Costs of administering the mandatory insurance funds had increased 288 percent between 1913 and 1929. And the government subsidy to the system had increased by 270 percent between 1924 and 1929. | ||
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| + | The extension of socialized health insurance also saw an increase in what the German literature called "malingering." As Walter Sulzbach expressed it in his study of the German Experience with Social Insurance (1947): | ||
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| + | Over a period of fifty years [1880-1930], during which medical science scored one triumph after another, it took the average patient under compulsory health insurance an ever longer time to recover. | ||
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| + | In 1885, a year after socialized health insurance began, the average number of sick days taken by members of the system each year was 14.1. In 1900, the annual average number of sick days per member had gone up to 17.6; in 1925, it had increased to 24.4 days; and in 1930, it was an average of 29.9 days. People also were noticeably sicker around weekends and Christmas and New Year's Day, particularly in those occupational insurance funds that waived the four-day rule before receiving cash benefits (The cash benefits were also tax-exempt, so the take-home pay lost by not working was less than fifty percent.). | ||
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| + | The ease with which an increasing number of insured workers were able to receive benefits from longer or more frequent periods of illness was not independent of the behavioral incentives at work on the physicians who were part of the system. Originally, the insurance funds set the fees for services rendered. But in 1913, a doctors' strike almost occurred, and was only averted at the last minute. After that, the fee schedules were determined by a joint committee comprised of representatives of the medical profession and the insurance funds. An essential ingredient of the fee system was that similar fees were paid for similar services, regardless of the patient's ability to pay. In other words, the frequent practice of private physicians to charge higher fees to wealthier patients as a means to earn higher income and to subsidize voluntarily the treatment they provided to poorer patients was outlawed. Hence, the determination of income earned by doctors in the system was purely on the basis of "quantity," i.e., the number of bodies examined at the fixed fee per period, as opposed to the quality of the service provided. | ||
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| + | At the same time, the tendency of a conveyor-belt view of patients resulted in workers insured under the compulsory system demanding freedom of choice in selecting a physician, rather than being assigned to a doctor participating in the system. This was established as part of the agreement of 1913. But it also meant that a doctor now had an incentive for greater leniency in diagnosing an illness and prescribing sick leave. A less accommodative physician ran the risk of losing his steady patients and suffering a decline in his income as fewer patients entered his examination room. | ||
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| + | According to some estimates, by the late 1920s, up to eighty percent of the medical profession in Germany was working for the mandatory health-insurance system, and sixty percent of all earnings in the medical profession came from payments from the compulsory-insurance funds. Pharmacies also were increasingly dependent upon the compulsory system, with as much as fifty percent of their business turnover coming from these insurance funds in 1928; by 1932, that figure was estimated to be as high as eighty-five percent. | ||
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| + | Walter Sulzbach summarized the nature of the system by the 1920s: | ||
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| + | The members of the German insurance funds were rarely satisfied with the medical help they received. There was little personal contact between the patients and their doctors. It was a system of mass treatment under which many doctors spent only a few minutes on each visitor during their office hours and made home calls as short as possible. " Kassenarzt, " meaning sickness fund doctor, was not a complementary term. "Kassenlowe, " "sickness fund lion," a term used to describe doctors who made big money from a huge number of insurance patients, was even less complimentary. | ||
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| + | Under the Nazi regime after 1933, the compulsory health insurance system became even more centralized and controlled. The insurance funds lost almost all autonomy and became subservient to the Fuhrer principle. And the employer share of health-insurance payments was increased from one-third to fifty percent. Once the Nazis were in power, explained Melchior Palyi, in Compulsory Medical Care and The Welfare State (1949): | ||
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| + | The ill-famed Dr. Ley, boss of the Nazi labor front, did not fail to see that the social insurance system could be used for Nazi politics as a means of popular demagoguery; as a bastion of bureaucratic power; as an instrument of regimentation, and as a reservoir from which to draw jobs for political favorites and loanable funds for rearmament. | ||
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| + | Thus, ended the first experiment in socialized health insurance. Begun by Bismarck as a tool of state policy to fight radical socialism through the implementation of Imperial State Socialism, it ended up as one of the cogs in the wheel of Hitler's | ||
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| + | ===History of Health Insurance in England=== | ||
==Private health insurance== | ==Private health insurance== | ||
Revision as of 20:19, 26 January 2007
Health insurance is a type of insurance that covers costs incurred for unexpected medical expenses. Health insurance is a relatively recent form of insurance; and it did not become important for most people until advances in modern medicine that made many procedures possible for repairing injuries and fighting disease. The pharmaceutical industry has also grown into one of the largest modern industries. Today medical expenses often exceed the cost of housing. A health insurer may be a corporation, a social institution, or a government agency. Health insurance can be market-based, socialized, or mixed, but in most countries it is some form of mixture.
There are many types of health insurance plans. Some are high-deductible plans that insure one against major expenses; these are the least expensive. Other are complete managed care programs that cover every visit to a physician and all medications. Health insurance plans can be for individuals, families, or groups. Socialized medicine is a form of national health insurance. Related types of health insurance usually purchased or provided separately are dental insurance, long term care insurance, and disability insurance.
People want to live long healthy lives, but the cost of insuring for the ever-increasing number and variety of medical treatments available is higher than what many people and societies can afford. This creates a moral and social challenge to find more ways that people obtain health insurance or reduce medical costs.
History and evolution
Forms of life and disability insurance date back to ancient times. In ancient Greece, benevolent societies were formed to care for individuals families when the income of the breadwinner was lost. Medieval guilds had similar plans. Many of the first group health insurance plans were an outgrowth of the guild idea. They were mutual insurance companies, like cooperatives, that were owned by the members. As shareholders, members would divide any profits from the company.
In the 19th century, early health insurance was actually disability insurance. Patients were expected to pay all other health care costs out of their own pockets. During the 20th century, traditional disability insurance evolved into modern health insurance programs. Today, most comprehensive private health insurance programs cover the cost of routine, preventive, and emergency health care procedures, and also most prescription drugs.
History of Health Insurance in the United States
The first insurance companies in the United States were mutual companies. The first policy giving health benefits was offered by Massachusetts Health Insurance of Boston in 1847.[1] The first individual plans in the United States began as a form of travel insurance to cover the cost if one was injured in an accident on a steamship or railroad. Insurance companies issued the first individual disability and illness policies around 1890. This payment model continued until the 20th century in some jurisdictions (like California), where all laws regulating health insurance actually referred to disability insurance.[2]
History of Health Insurance in Germany
State-mandated health insurance began in Germany in 1884, and initially covered workers in various labor unions. Coverage expanded to other parts of the work force, with family members of workers included after 1892. By 1928, practically all workers in Germany making less than 3,600 marks were forced to participate in the system.Cite error: Closing </ref> missing for <ref> tag. In 2005, 46.6 million (15.9%) Americans were without health insurance for at least part of the year.[3] However, approximately one-third of these without insurance live in housholds with an income over $50,000, with half of these having an income of over $75,000.[4] Also, one third are people who are eligible for public health insurance programs but have not signed up for them. People living in the western and southern United States are more likely to be uninsured.[3]
Medicare
In the United States, government-funded Medicare programs help to insure the elderly and end stage renal disease patients. Some health care economists (Ewe Reinhardt of Princeton and Stuart Butler among others) assert that (the third party payment feature) these programs have had the unintended consequence of distorting the price of medical procedures. As a result, the Health Care Financing Administration has set up a list of procedures and corresponding prices under the Resource-Based Relative Value Scale.
Starting in 2006, Medicare Part D provides a program for the elderly to buy insurance for the purchase of prescription drugs.
Medicare Advantage
Medicare Advantage expands the health care options for Medicare beneficiaries. Medicare Advantange was born from the Balanced Budget Act of 1997 in order to better control the rapid growth in Medicare spending, as well as to provide Medicare beneficiaries more choices.
Medicaid
While Medicaid was instituted for the very poor, beginning in 1972, the number of individuals in the United States who lacked any form of health insurance for any period during the year increased each year, every year with the exceptions of the years 1999 and 2000.[citation needed] It has been reported that the number of physicians accepting Medicaid has decreased in recent years due to relatively high administrative costs and low reimbursements. [5]
The shift to managed care in the U.S.
Through the 1990s, managed care grew from about 25% of U.S. employees to the vast majority.
| Rise of managed care in the U.S. | |||||
|---|---|---|---|---|---|
| Year | conventional plans | HMOs | PPOs | POS plans | |
| 1988 | 73% | 16% | 11% | NA | |
| 1993 | 46% | 21% | 26% | 7% | |
| 1996 | 27% | 31% | 28% | 14% | |
| 1998 | 14% | 27% | 35% | 24% | |
| 1999 | 9% | 28% | 38% | 25% | |
| 2000 | 8% | 29% | 41% | 22% | |
| 2001 | 7% | 23% | 48% | 22% | |
According the Centers for Medicare and Medicaid Services, nearly 100% of large firms offer health insurance to their employees.[6] Although much more likely to offer retiree health benefits than small firms, the percentage of large firms offering these benefits fell from 66% in 1988 to 34% in 2002.[7]
Health insurance in Canada
Until recently, private health insurance was illegal in all of Canada. All insurance was supplied by the government. Recently, the Supreme Court of Quebec ruled, in Chaoulli v. Quebec that private business must be allowed to offer health insurance and compete with the public program.
Notes
- ↑ [http://www.lieberson.com/en/medical%5Fhistory%5Fand%5Fethics/history/history_of_health_insurance.htm The History of Health Insurance in the United States], viewed January 26, 2007.
- ↑ See California Insurance Code Section 106 (defining disability insurance).[1] In 2001, the California Legislature added subdivision (b), which defines "health insurance" as "an individual or group disability insurance policy that provides coverage for hospital, medical, or surgical benefits."
- ↑ 3.0 3.1 Cite error: Invalid
<ref>tag; no text was provided for refs namedCensus - ↑ Income, Poverty, and Health Insurance Coverage in the United States: 2005. U.S. Census Bureau
- ↑ Cunningham P, May J. "Medicaid patients increasingly concentrated among physicians." Track Rep. 2006 Aug;(16):1-5. PMID 16918046.
- ↑ http://www.cms.hhs.gov/TheChartSeries/downloads/private_ins_chap4_p.pdf
- ↑ http://www.cms.hhs.gov/TheChartSeries/downloads/private_ins_chap4_p.pdf
ReferencesISBN links support NWE through referral fees
- Bodenheimer, Thomas S., and Kevin Grumbach, Understanding Health Policy, McGraw-Hill Medical, 2004. ISBN 0071423117
- Boni, John A., et. al., The Health Insurance Primer, HIAA Insurance Education, 2000. ISBN 1879143496
- Starr, Paul, The Social Transformation of American Medicine, Basic Books, 1984. ISBN 0465079350
- Webster, Charles, National Health Service: A Political History, Oxford University Press, 2002. ISBN 019925110X
See also
- COBRA
- Government ownership
- Health economics
- Health maintenance organization
- Healthcare reform
- Health Insurance Portability and Accountability Act
- Self-funded health care
- List of insurance topics
- Public health
- RAND Health Insurance Experiment
- Social security
- Social welfare
- AHIP
External links
- Ebling, Richard M., National Health Insurance and the Welfare State, published January 1999, viewed January 26, 2007.
- Erlen, John, History of American Health Insurance, viewed January 26, 2007.
- History of Health Insurance in the United States, viewed January 26, 2007.
- Frequently-asked questions about health insurance
- Why the United States Has No National Health Insurance: Stakeholder Mobilization Against the Welfare State, 1945-1996
