Health Insurance Blog

Insurance, in law and economics, is a form of risk management primarily used to hedge against the risk of a contingent loss. Insurance is defined as the equitable transfer of the risk of a potential loss, from one entity to another, in exchange for a premium. Insurer, in economics, is the company that sells the insurance.

Insurance rate is a factor used to determine the amount, called the premium, to be charged for a certain amount of insurance coverage. Risk management, the practice of appraising and controlling risk, has evolved as a discrete field of study and practice.The term health insurance refers to a wide variety of insurance policies.

These range from policies that cover the costs of doctors and hospitals to those that meet a specific need, such as paying for long-term care. Even disability insurance—which replaces lost income if you can’t work because of illness or accident—is considered health insurance, even though it’s not specifically for medical expenses.1910s: “Sickness” insurance, similar to today’’s disability insurance, gains popularity to replace wages lost because of illness. 1910: Abraham Flexner’’s Carnegie Foundation report criticizes standards of medical care, training of physicians and other practices. 1913: American College of Surgeons is established, sets standards for members and hospital accreditation, leading to higher fees for services. 1920: Compulsory health insurance proposal by American Association for Labor Legislation fails. 1920s: Rise of effective medical treatments and medical licensing standards leads to higher costs; shift to urban living brings more hospital demand. 1927: Committee on the Costs of Medical Care formed, reports that hospital expenses can burden families. 1929: Dallas teachers form Blue Cross to provide 21 days of hospitalization for a fixed $6 payment; similar prepaid hospital plans urged by the American Hospital Association. 1934: California Physicians Service operates first prepayment plan for physician services, a precursor to Blue Shield, open to employees earning less than $3,000 a year at a cost of $1.70 per month. 1935:

Congress defeats proposed national health plan. 1940s: Commercial insurers enter health market after the Blues” success in group insurance. World War II: Employers, subject to wage controls, compete for workers by offering insurance. 1943: IRS administrative ruling says payments to health insurers are not taxable as employee income. 1945: War Labor Board rules that employers can”t modify or cancel group insurance plans during the contract period. 1949: National Labor Relation Board rules that insurance benefits are “wages” subject to collective bargaining; Congress defeats national health insurance proposal. 1951: 82 million people covered by commercial plans or Blue Cross and Blue Shield. 1954: IRS exempts health plan payments from taxable income. 1958: 75 percent of Americans have private health insurance coverage.

1965: Congress enacts Medicare for the elderly and Medicaid for low-income people. 1985: To protect employees who lose group coverage, Congress enacts COBRA, named for the Consolidated Omnibus Budget Reconciliation Act. 1994: Clinton national health plan defeated. 1996: Congress enacts Health Insurance Portability and Accountability Act to let employees keep insurance when they change jobs, among other provisions.

1997: Congress enacts Children’’s Health Insurance Program to cover children from low-income families. Late 1990s: Discussions on consumer-directed health care begin. 2003: President Bush signs law that expands health savings accounts. 2005: Congress adds drug benefits through Medicare Part D. 2006: Massachusetts passes mandatory health insurance law. 2007: Bush proposes changes in tax laws to “level the field” for nongroup insurance. (hypothetical scenario)2010: Medicare trust fund due to start losing money.

2018: Medicare trust fund due to become insolvent.