The Journey of Employer Sponsored Health Insurance

HBI Blog / The Journey of Employer Sponsored Health Insurance

Health Insurance – The Start in 1930

Private health insurance arrived in the US as early as 1930. Blue Cross and Blue Shield plan made a way for private insurers to start working on their customized health insurance plans to meet the healthcare needs of a growing market across the country. However, at this stage, employers were not in the picture, and the health insurance was exclusively purchased by individuals.

World War II – The Introduction of Employer-Sponsored Health Coverage (40’s)

To combat inflation due to World War II, the 1942 Stabilization Act was passed. As a result of this act, employers were allowed to offer health benefits instead of incentives. All of sudden, employer-sponsored health insurance was introduced to the market. Health benefits are considered as part of compensation and are not counted as income. Therefore, the workers did not have to pay taxes on the monthly premiums on these health insurance benefits.

Employer Sponsored Health Insurance

Dental, Vision, and Medicare (1950-1980)

1950-1980 saw a huge expansion of healthcare coverage options. During this time, several medical plans evolved. Vision care gained massive popularity by 1957 and dental care became an incentive to offer in 1959. Lyndon Johnson created the Medicare and Medicaid systems in 1965 to make healthcare available for retirees and people with low-paying jobs and no healthcare benefits. It was clear by early 1970 that healthcare reform was in order.

HSA, HMO, and ACA (’90s – Today)

In 1992, healthcare once again became a matter of national debate when Bill Clinton’s elected as the President. Hillary Clinton, was put in charge of promoting his health insurance reform plan – the Health Security Act. However, the plan couldn’t succeed as it was considered too radical of an overhaul of the healthcare system.

On the flip side, the inflation was rising and the employers were dropping coverage, HMO was born. HMO, with its open-access plans, became more liberal. With insurance companies dictating the cost of care, including variable prices for similar procedures, medicine and long term care plan, we experienced a huge rise in the healthcare cost.

In 2010, President Obama signed into law the Affordable Care Act or ACA to cope up with the crisis state of the healthcare industry in America. Despite being popular, the ACA is still in its infancy, and the long-term effects are yet to be seen.

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