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When Did Health Insurance Start?

The purpose of any kind of insurance policy, including health insurance is to minimize risk. The risk of losing your house, the risk of totaling your car and be left with nothing, the risk of losing your life, your business, etc.

However, the beginning of health insurance was a lot different to the nation- and worldwide conglomerates we know today.


Three millennia of insurance history

The principle of insurance is to spread risk from a single individual to a larger community, and, in a matter of speaking, we could state that insurance is as old as the human society.In what we now know as Asia, Chinese and Babylonian merchants implemented the first methods of risk distribution. In the case of Chinese merchants, when they were bound to cross a dangerous area of a river, they would physically distribute risk, by allocating their goods in many vessels, and reducing the loss if one of them were to overturn. Babylonian merchants, on the other hand, would request a loan to fund their shipment and pay an extra fee to guarantee that the lender would cancel the loan if they merchandise were to be stolen or lost at sea. This system was recorded in the ancient Code of Hammurabi.

Then during the first millennium B.C., in Rhodes, the first draft of the general average principle was created. Back then, this type of clause permitted groups of merchants to have their goods insured if they were going to be shipped together. The combined premiums would be the insurance in case any merchant lost their merchandise during transport.


But when did health insurance start?

The answer to that question would be a few hundred years later. The first health/life insurance policies were created as “benevolent societies” by the Greek and Roman. Benevolent societies took care of the families of members who had passed and arranged and cover funeral expenses.

The first type of health insurance offered in the U.S was accident insurance. This was provided in the mid-1800’s by the Franklin Health Assurance Company of Massachusetts, which offered insurance against injuries deriving from steamboat and railroad accidents. The number of companies increased exponentially in the next decade, and in the next century, the first disability policy was issued. However, the purpose of this insurance policy was to replace wages, and not to cover medical expenses.

In the 1920’s, medical and hospital expenses were covered by each individual on a pre-paid scheme.This was the beginning of health insurance as we know it today and; the first hospitalization plan sponsored by an employer in the U.S. was established in Texas in 1929 by Dallas teachers. This lead to the development of Blue Cross, an organization that to this day offers different types of insurance policies and encompasses a large number of insurance providers.

It took the insurance concept more than a hundred years to transform and evolve, from the then traditional disability policies to the health programs and plans that we know today.

As you can see, the beginning the insurance concept is not new, in fact, it is more than four thousand years old. However, health insurance has been around for about nearly 100 years.

Nowadays, there are plenty of options in terms of health insurance quotes and prices, but we can’t imagine our lives without health insurance and thus we always seek the best insurance provider we can afford. History and catastrophic events such as fires, hurricanes, and earthquakes, have taught us that there is an undeniable truth to the saying “it is better to be safe than sorry,” and in the case of the dilemma of having or not having health insurance, this can be applied accurately.

Should you need help with choosing health insurance that would suit your needs and budget, give us a call and let's help you out!