In 1912, as World War I (or the Great War, as people then called it) approached, Teddy Roosevelt endorsed social insurance as an element of the Progressive Party’s platform. His entire campaign ran boldly: he’d already served two terms, winning in 1900 and 1904, and after four years out of office, he shocked the country in February 1912 by announcing he would run for a third office. Woodrow Wilson defeated his opponents, including the incumbent William Howard Taft, but Teddy’s concept of social insurance kickstarted motions for government control.

Major changes in the American form of health policy occurred in 1912, 1915, 1921, 1927, and 1929.

• 1912: The National Convention of Insurance Commissioners models a state law to regulate health insurance

• 1915: The American Association for Labor Legislation drafts a bill for required health insurance 

• 1921: The Sheppard-Towner Act emphasizes prenatal and infant health

• 1927: The Committee on the Costs of Medical Care begins its 5-year research study

• 1929: Baylor Hospital introduces the Baylor Plan, revolutionizing health insurance forever

1912

After Roosevelt’s ambitious endorsement, the National Convention of Insurance Commissioners (NCIC), now known as the National Association of Insurance Commissioners, developed its first model of a state law to regulate health insurance.

NCIC originated after the 1871 Supreme Court case Paul v. Virginia, which held that corporations are not citizens within the Comity Clause, meaning that a US state can discriminate against corporations (but not citizens) on the basis that they are from other states and also held that Congress has no power to regulate insurance under the Commerce Clause.

Paul v. Virginia

• Held that a corporation is not a citizen within the Privileges and Immunities Clause, also known as the the Comity Clause

• Held that Congress has no power to regulate insurance under the Commerce Clause

NCIC set out to change that, beginning with a model of state law that would regulate health insurance. NCIC saw some success when United States v. South-Eastern Underwriters Association partially overturned Paul v. Virginia. The result of the case determined that the Sherman Act applied to insurance.

1915

Three years later, the American Association for Labor Legislation (AALL) drafted a bill that would require health insurance. Partially because of the United States’ involvement in World War I, the bill did not pass. The bill’s failure sparked national controversy.

A number of organizations supported the bill, including AFL-CIO, the American Nurses Association, the National Association of Social Workers, and the Socialist Party USA. Leading the charge against it, the American Medical Association (AMA) joined the American Hospital Association, US Chamber of Commerce, and Life Insurance Association of People.

“The bill’s failure sparked national controversy.”

In 1943, AALL became inactive after its 30-year secretary John Bertram died. The association dissolved in 1945.

1921

In November 1921, the Sheppard-Towner Act, also known as the National Maternity and Infancy Protection Act, passed. The act expired on June 30, 1929, because Congress failed to pass a bill in 1927 that would renew the act. The 1927 failure, which happened largely due to AMA opposition, did include provisions for a two-year extension of funding.

Sheppard-Towner Act

• Provide matching federal funds to states for prenatal and child health centers

• Provide federal funds for educational programs about prenatal and infant health

Advocates of the act hoped it would reduce infant mortality. In fact, during its eight years of effect, infant mortality did decrease overall. Additionally, the act led to the establishment of nearly 3,000 prenatal care clinics, 180,000 infant care seminars, and 3,000,000 home visits by traveling nurses, plus the national distribution of educational literature.

While the act ultimately expired, its influence rippled beyond its death throes. Much of later legislation contained provisions (rules or laws written in a legal document) aimed at infant and maternity welfare. The most well-known example of legislation that the Sheppard-Towner Act influenced is Franklin D. Roosevelt’s famous Social Security Act of 1935.

1927

From 1927-1932, the self-constituted, private organization known as the Committee on the Costs of Medical Care formed. It studied the economic effects of healthcare, or in its own words, its mission was “to study the economic aspects of the care and prevention of illness.”

About fifty people worked in the private organization. Directed by Harry Moore, these included physicians, public health specialists, sociologists, and more. Thanks to the intellectual diversity of the group, they rarely reached consensus, but operated on a majority basis.

Its mission was “to study the economic aspects of the care and prevention of illness.”

In November 1932, as the group came to its close, they published their recommendation report. The majority of the committee endorsed medical group practice and voluntary health insurance. One article deemed this report “a document which changed the course and the pace of evolution for the health services of the United States.” Four conclusions generally arose in the report:

• Medical service should come from groups of doctors and prioritize standard of care and personal relation between physician and patient

• The cost of medical care should be spread out over time and across groups of people

• Methods of disease prevention should be more widespread

• Health facilities should be coordinated on a community basis

1929

Arguably the most significant moment in the history of health insurance, Baylor Hospital introduced its prepaid hospital insurance plan, the Baylor Plan, in 1929. Justin Ford Kimball birthed this brainchild, which foreshadowed our insurance models today.

“Arguably the most significant moment in the history of health insurance…”

As a result of the plan, 1,300 Dallas-area teachers (three-quarters of all Dallas teachers) paid just 50 cents per month and received in exchange 21 days of hospital care. This prepaid model foreran future Blue Cross Plans, but as competitors emerged on the insurance market, the Baylor Plan faded to history. It is unfortunate that such an innovative plan would be trampled by its own children.

In 1946, the American Hospital Association (AHA) led efforts that morphed into Blue Cross, which provides service at all hospitals in a given community. Following a similar model, a plan called Blue Shield covered non-hospital physician services. Initially, critics met Blue Shield with skepticism, but the idea latched on and took root. Like the Baylor Plan, the non-profit Blue Shield plans eventually faced threats from for-profit insurance companies, but they have survived.

“It is unfortunate that such an innovative plan would be trampled by its own children.”

Although 1929 saw the birth of modern insurance, it remains that “before 1929, life insurance was already fairly common,” according to History. Mutual aid societies (also known as fraternal societies) offered health care benefits. Likewise, labor unions and businesses had “industrial sickness funds” to pay sick or injured employees. The Baylor Plan had huge consequences on the realm of health insurance all the same.

Conclusion

In just seventeen years, beginning with Teddy Roosevelt’s progressive social insurance platform and ending with the innovative Baylor Plan, the United States watched health policy grow and evolve. The next ten years, which would endure the Great Depression and the lightning-fast beginning of the deadliest war in human history, witnessed more significant changes, especially under the guide of President Franklin Delano Roosevelt and his “New Deal.”

We here at Fairdoc hope this article was informative. Stay tuned for more brief and educational posts about healthcare!