Health Insurance
a form of insurance which insures its beneficiaries against need in time of illness and compensates for the loss of employment during periods of illness. It is one of those departments of the general field of insurance which was taken up reluctantly by private enterprise, on account of the difficulty of protecting the insurance companies against fraud. Health insurance may be divided now into three distinct classes; commercial, mutual, and social. Commercial health insurance has developed only to a limited extent, and that only within the past few years, being generally connected with the business of casualty companies. Mutual 1 HEALTH INSURANCE health insurance, commonly known as "sick and death benefit," has acquired vast dimensions in all civilized countries.
It had its origin in the early "friendly societies" of Great Britain and the fraternal orders of this country. Mutual health insurance is based on distinctly co-operative principles. These co-operative enterprises in their turn, obviously, had evolved from the still earlier forms of mutual benefit associations, the guilds, which assured their members support during illness. Some historians find traces of such organizations having existed in Anglo-Saxon England. After the institution of the factory system of employment in England and this country, with its precariousness of livelihood, the mutual societies sprang up spontaneously all over both these countries among the working classes. As modern industrialism appeared in other countries, and in the order of its appearance, these also developed similar working-class organizations.
The objects that these societies first contemplated were the securing, in return for small weekly payments by the members, of a weekly sum during sickness and a pension after a certain age. At first these weekly payments by the members were uniform in amount, but with the accumulated experiences which followed, the system of collecting higher payments in proportion to the ages of the members began to be adopted, it being recognized that liability to sickness increased with age. On account of the disinclination of private enterprise to enter the field of health insurance, the British Government very soon began to interest itself in the welfare of the friendly societies, and assisted them in formulating scales of payments, based on statistics gathered by the Government itself, a task which was at that time beyond the capacity of any working-class organization. This government protection became all the more necessary because of the many fraudulent societies which, initiated by private individuals, preyed on the ignorance of the working people. Eventually the Government, through the Registrar of Friendly Societies, made itself responsible for the reliability of all genuine mutual aid societies, based on the principles which the Government itself had formulated.
Social health insurance is of much more recent origin than the mutual aid class of insurance, and generally implies state backing. On a broad scale, this form of health insurance had its origin in Germany, where it was instituted in 1884, largely through the sponsorship of Bismarck, who saw in this type of government paternalism an antidote to the HEARST growth of revolutionary Socialism. The idea was then adopted in other countries, in the following order: Austria, 1888; Hungary, 1891; Luxemburg, 1901; Norway, 1909; Serbia, 1910; Great Britain, 1911; Russia, 1912; Rumania, 1912, and the Netherlands, 1913. In the above countries the system is compulsory, within the limits of certain industries, and on employees whose yearly incomes fall below a certain set minimum. In all these cases the government assumes only a part of the cost, amounting to various percentages in the different countries.
Great Britain assumes two-ninths of the cost, but adds various other supplementary subsidies, which bring it up to onethird. The beneficiaries are obliged to pay: men ten shillings a year, women eight shillings. Other countries base their subsidies on the wages of the policy holders, ranging from a third to onehalf. In all the employers are also compelled to contribute, ranging from a third in Germany to a half in Hungary. The average period of the benefit is for twenty-six weeks.
In this country there has also been a rapid extension of social insurance as an idea, since 1911, in connection with the workmen's compensation movement in the various States. In 1915 the American Association for Labor Legislation drafted a tentative bill for State insurance, which was brought up in the following year in the legislatures of Massachusetts, New Jersey and New York. In each case the bill failed being passed, but the result was to create wide public discussion in the press. The idea is now being pressed strongly by such organizations as the American Medical Association, the American Public Health Association, the National Conference of Charities and Correction, and by many labor or organizations, notably by the State federations of labor.