Early History of Health Insurance in America

The first 15 private health insurance companies were chartered in Massachusetts in 1847-48. They did not have long-term success. At the same time, more than 100 benevolent societies operated successful group health mutual insurance in New York City. There were about 700 nationwide.

Industrial Sickness Insurance

• Around 1900, workers wanted insurance that covered paid sick days and were not as interested in more expensive medical benefit insurance. They purchased industrial "sickness insurance" through employers.

Imitating Benevolent Societies

• Imitating benevolent societies, industrial sickness (sick day) insurance companies raised money from entertainments as well as membership dues and held social events for members. They sold beer.

Fewer Than Half

• In 1908, the average "establishment" (employer) insurance plan had 730 members in workplaces of 1,652 workers, so approximately 44 percent of potentially covered workers were actually covered. A 1909 audit of early life and "sickness" insurance plans showed that fewer than 5 percent had actuarial data.

The Baylor Plan

• The first modern employee group benefit plan was an agreement between Dallas County public school teachers and Baylor Hospital in 1929. The Baylor Plan was organized by a hospital administrator who had previously been a school superintendent.

Blue Cross Blue Shield

• In 1944, the Baylor Plan merged into Blue Cross Blue Shield of Texas. By that time, more than 3 million Americans were covered by Blue Cross Blue Shield policies.