The origins of health insurance and its impact on our lives today can be traced back to a small town called Dallas, Texas in 1929. Justin Ford Kimball, the vice president of Baylor Hospital, noticed a troubling trend during the Great Depression. Revenue and admissions were down, while unpaid bills were on the rise. As someone in a position of importance, Kimball knew he had to take action.

Ben H.

Ben H.

Feb 05, 20244 min read

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The origins of health insurance and its impact on our lives today can be traced back to a small town called Dallas, Texas in 1929. Justin Ford Kimball, the vice president of Baylor Hospital, noticed a troubling trend during the Great Depression. Revenue and admissions were down, while unpaid bills were on the rise. As someone in a position of importance, Kimball knew he had to take action.

To address this issue, Kimball came up with a plan known as the Baylor Health Plan. For just $0.50 per month, individuals could receive a 21-day stay at the hospital. Anything beyond that would cost $5.00 per day. This innovative approach aimed to increase admissions and improve revenue collections. Notably, the Baylor plan emphasized its direct dealings with groups, ensuring that all fees paid went towards hospital care and not personal profit.

This marked the beginning of the framework for our current health insurance system, with Blue Cross and Blue Shield becoming prominent providers for hospital and medical coverage, respectively. The 1942 Stabilization Act further solidified the role of health insurance by freezing wages and prompting large companies to offer health benefits as a means to attract and retain talent.

While profit is not inherently bad, the problem arises when it is generated through leveraging legal and statutory mechanisms without adding value. Currently, employers spend a staggering $1.2 trillion on healthcare annually, while the government spends $1.6 trillion. Decoupling health coverage from employment is crucial to ensure a strong economy and support workers. The reliance on job-based coverage unfairly ties individuals to jobs that may mistreat them, solely because they need healthcare coverage. This issue is exemplified by the nurses at Robert Wood Johnson who are on strike but face the possibility of losing their benefits.

In order to achieve a soft landing in the economy, it is essential to observe the hiring practices of businesses. Various sectors are experiencing cooling, which is desired by the Federal Reserve to combat inflation. For instance, freight railroads are witnessing a decline in shipping volumes, construction firms are reducing equipment purchases, and vending-machine companies are negotiating lower prices. However, the key to a measured slowdown lies in whether companies choose to retain their workers or lay them off.

Contrary to predictions, companies are prioritizing the retention of workers. Even in the face of economic uncertainty, companies like Apple are avoiding layoffs. This is a significant departure from the layoffs seen during the recessions of 2007-2009 and 2020. The decision to hold on to workers, despite potential inflation and high interest rates, contributes to a more stable economy.

To address the issues surrounding health insurance and the economy, here are three actionable pieces of advice:

  • 1. Advocate for a decoupling of health coverage from employment: By separating health insurance from jobs, individuals will have the freedom to choose employment based on factors other than healthcare benefits. This will foster a more equitable job market and prevent individuals from being trapped in unfavorable work environments.
  • 2. Support healthcare reforms to reduce costs: Artificially high healthcare costs contribute to the burden placed on employers and the government. By advocating for reforms that address the root causes of inflated healthcare expenses, such as pharmaceutical pricing and administrative waste, the overall cost of healthcare can be reduced.
  • 3. Promote a shift towards preventative care: Investing in preventive healthcare measures can significantly reduce healthcare costs in the long run. Encouraging individuals to prioritize their health through regular check-ups, screenings, and healthy lifestyle choices will not only improve their well-being but also alleviate the strain on the healthcare system.

In conclusion, the origins of health insurance can be traced back to the Baylor Health Plan in 1929. Over time, health insurance became intertwined with employment, creating a system that restricts individuals' choices and perpetuates inflated healthcare costs. To create a more equitable and sustainable healthcare system, it is crucial to advocate for the decoupling of health coverage from employment, support healthcare reforms to reduce costs, and promote preventive care. By taking these steps, we can work towards a future where healthcare is accessible to all and the economy is built on a solid foundation.

Resource:

  1. "The Healthcare Breakdown No. 024 - Breaking down the origins of health insurance and how it makes your life suck today", https://www.thehealthcarebreakdown.com/p/the-healthcare-breakdown-no-024-breaking?utm_source=substack&utm_medium=email (Glasp)
  2. "How the U.S. Economy Is Sticking the Soft Landing", https://www.wsj.com/articles/how-the-u-s-economy-is-sticking-the-soft-landing-cf140c04 (Glasp)

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