With America teetering on the brink of the Great Depression, plans
began to spring up around the country. Initially centered around single
hospitals, joint hospital programs started in larger cities, and small
“prepayment” premiums were well received by Americans who were
beleaguered by war, pandemic, and financial collapse. More sophisticated
insurance products would be developed over the next several decades, like
indemnity (specific cash benefit, or “cap”), service benefit (care for a
number of days for specific conditions), and major medical insurance
(supplemental, “catastrophic”), but in the 1930s, the plans served as the
only health insurance that most Americans had ever heard of.
In Minnesota, the local organization was called the Blue Plan, and its
administrator E. A. van Steenwyk sought a new symbol for his company.
After some deliberation, a blue cross was chosen, and of course, in time,
the cross came to symbolize, nationwide, the hospital prepayment
programs that would eventually become a centralized national
organization. Justin Ford Kimball, who was neither an actuarial scientist
nor trained hospital administrator, took the reins of a hospital as a fifty-
seven-year-old neophyte, and started a revolution in health insurance that
within a few years became Blue Cross, now a multibillion-dollar industry
that dominates the federal and commercial healthcare landscape, and
paved the way for Americans to afford major elective (implant-based)
operations that would have been unthinkable in the Roaring Twenties,
when Kimball was just a school superintendent.
Within a decade of the founding of Blue Cross, the American Medical
Association (AMA) and its physicians decided that a similar prepayment
program should be considered for physician office visits. There had been
longstanding antagonism between the very powerful American Hospital
Association and the AMA, particularly on the issue of health insurance,
where hospitals were almost immediately receptive to the idea of national
health insurance (even government-controlled single-payer insurance), and
the AMA was fighting tooth and nail to reject government-administered
health insurance.
Advances in medical and surgical sciences were “shifting the locus of
care from the home or doctor’s office to the hospital,”^8 and as “house
calls” were vanishing, there was a growing public demand for medical
service plans for physician services. In time, physicians warmed to the
(initially) not-for-profit Blue Cross idea of healthcare prepayment, and