The most primitive form of health insurance existed before the invention of the wheel. If a member of the tribe became ill, the women would gather together and help heal them. Everyone would chip in to ensure the invalid’s family was cared for and fed. There was no application process or insurance card or even a payment. It was just expected that all the members of the community would help each other, no questions asked.
Moving slightly forward in the world’s history, it is said that Archaemenian monarchs were the first to insure their people. The tradition was as follows: once a year, at the beginning of the Iranian New Year, the heads of different tribes presented lavish gifts to the monarch. Wealthy families were also known to present gifts to do so. If the gift was worth more than a certain amount, then it was registered. During the following year, if one of the gift givers found himself in trouble, the ruler would be notified and issue orders for the court to help. This practice expanded to more than just medical concerns. If the subject wanted to construct a building or have a feast, he would apply for help and if his gift had been large enough, he would receive twice its perceived value.
The Greeks and Romans also had a form of health and life insurance. In 600 BCE they created guilds that cared for families whose head of the family or main earner, had passed away. Group insurance became a common practice during the middle ages, where wealthy families and religious groups would donate sums to a central guild. The guild was responsible for distributing funds when a medical disaster occurred, such as an outbreak of the plague or the pox. It was not uncommon for the British monarchy to pay a legal entity against the death of their heirs. For example, King Henry VIII’s will outlined a provision for the Princesses Elisabeth and Mary should his son Edward die before he became of legal age.
In North America, the concept of health insurance was first proposed in 1694. Then the industrial revolution brought with it all kinds of new hazards. Fire was a significant fear, as the use of coal in factories was popular. Houses were always made of wood, and modern contraptions like smoke alarms and electricity hadn’t been invented yet. Thus in 1752 Benjamin Franklin helped standardize the practice of insurance. He formed a company that was the first to coin the phrase ‘fire prevention’. Then in 1850, the Franklin Health Assurance Company of Massachusetts was founded. It offered personal injury insurance arising from railroad accidents. Not long after that, disability was introduced, but it was called accident and sickness insurance.
Some may find it surprising that disability insurance was available in the 19th century. Keep in mind that it was paid in a lump sum, representing all the wages the individual was perceived to have earned. The patient was expected to pay all the other health care costs, which in reality was the advent of the fee-for-service model. So, by the 1920′s individual hospitals began seeing an opportunity for making their services more lucrative. They began offering services to wealthy individuals on a pre-paid basis. Then the Great Depression hit and hospitals all over the United States were forced to fully embrace the practice.
It wasn’t until the 1980′s that comprehensive insurance packages were offered. Now it is common for policies to cover the costs of routine, preventative and emergency medical needs. Prescription drugs and medical equipment are often part of the package as well, but this was not always the case.
If we use the evolution of the wheel as an analogy for the evolution of health insurance, it is easy to see how its need for constant change brought it to what we have today. The wheel started out as a round chunk of wood or stone and evolved into a complicated and highly specialized piece of technology. Health Insurance began as a small community pulling together to help each other and evolved into a massive network of medical professionals and insurance companies, all lending a hand to help each other.
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