There was a time when health insurance was strictly used to pay the cost of being in a hospital; ergo the name hospitalization insurance. The following resourceful history of this kind of health insurance and its original intent may surprise many of the readers.

In 1934 Group Hospitalization, Inc. was formed by a private hospital association in Washington, DC. That hospital group was comprised of physicians who were greatly concerned that their patients might not be able to afford a necessary admission to a hospital. The cross symbol was first used in a 1934 advertisement for the Hospital Service Association, today known as Blue Cross Blue Shield of Minnesota.

The year was 1937 and in Maryland, a group of 15 hospitals in the city of Baltimore agreed to participate in a hospitalization plan called Associated Hospital Service of Baltimore; they would begin using the Blue Cross service mark as their logo. By 1942 another Group Hospitalization, Inc. was organized. In 1947 Group Hospitalization, Inc. was authorized to use the Blue Cross service mark. In 1948 a concerned physicians group called the Medical Service of the District of Columbia was founded to promote a hospitalization plan for their patients. Two years later, the Maryland Medical Service, Inc. was incorporated and licensed to use the Blue Shield name. In 1951 Group Hospitalization, Inc. becomes a fully participating member of the Blue Cross system. The following year, Medical Service of the District of Columbia is authorized to use the Blue Shield service mark. In 1957 Maryland Hospital Services, Inc. enrollment reached one million members.

As pointed out in the previous article (# 14), as employers place tax deductible funds in a worker’s paycheck, a portion will be invested in a health savings account and the remainder will be used to purchase catastrophic health insurance. The amount of an employee’s insurance deductibility purchased will depend upon the individual’s monthly income, the need for cash flow and the equity one might have in one’s home to pay the co-pay if and when a needed hospitalization arises. $5000 deductible policies are obviously more expensive than $10,000 or $15,000 polices. This type of insurance will not be managed by a health maintenance organization and it will be funded by a large group of workers that includes healthy, young people because, like liability auto insurance, it can be made a requirement for all working citizens. This law can be the purview of state legislatures, in the same way as is a law requiring automobile liability insurance.

This new healthcare delivery system will return our dissemination of medical care back to what it was prior to 1960, a competitive, free market, when a routine visit to a physician’s office was affordable, paid for in cash or check, admissions to a hospital were covered by medical insurance and the only people making the decisions regarding healthcare were a patient, a family member and the patient’s physician.