A Short History of Healthcare as a Business

In 1929 Justin Ford Kimball, an administrator at Baylor University Hospital in Dallas, offered the city's schoolteachers a deal. For a fixed prepayment, widely reported as 50 cents a month, each teacher would be entitled to up to 21 days of hospital care a year. The Depression was emptying hospital beds and drying up charitable gifts, and the hospital needed a reliable flow of paying patients more than it needed high prices. The Baylor plan is generally treated as the origin of Blue Cross, and with it of American health insurance.

The detail that mattered most was who designed it. The plan was created by a hospital, for a hospital. It paid for services rendered and did little to manage how many were used. Almost a century later that design choice still shapes the industry. American healthcare was not planned. It grew in layers, and each layer answered the money problem the previous one left behind.