The History of Health Insurance

Part 4:

As the demand for hospital care increased in the 1920s, a new way to pay for medical care was born that would forever change the market for health insurance. The Baylor plan developed as a way to ensure that people paid their expenses, and they provided 21 days of hospitalization for a fixed $6 payment.

1.) Due to the fact that Blue Cross was becoming increasingly popular, some physicians feared that their autonomy was in jeopardy.

From the Baylor plan...pre-paid hospital plans grew over the course of the Great Depression. By the 1930s, pre-paid hospital care was good for both consumers and hospitals. However, over time, the hospitals eventually ran into some financial trouble due to falling incomes. Add to that, The American Hospital Association (AHA) encouraged hospitals to treat patients with lower incomes. But the prepaid plans also obviously benefited the hospitals by giving them a steady stream of income. Since single hospital plans made for more competition among hospitals, community hospitals started organizing with each other in order to cut down the competition. These plans, also combined with the AHA, lead to the name Blue Cross.

(To be continued)

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