The medical insurance system in the United States is considered to be one of the most important insurance systems available in the country. It is a well-known fact that the costs of medical care in the United States are steep. Hence, it is best to purchase a medical insurance plan and have your medical care expenses covered by the medical insurance company.
The concept of the medical insurance system in the United States was first seen as voluntary programs. As early as 1850, medical insurance policies were already made available provided mainly by fraternal beneficiary associations and cooperative mutual benefit organizations. However, the proliferation of medical insurance systems in the United States was still vague until the 1920’s when people were mostly treated at home, hence, the need for a comprehensive medical insurance coverage was not necessary.
Moreover, most insurance companies during that time were hesitant in providing medical insurance policies, taking into consideration the very low demand for such type of insurance. Experts say that it was in this point in history that insurance companies believe that health was not an insurable service due to high probabilities of moral hazard and adverse selection.
Moral hazard refers to the mental condition and behavioral changes caused by one’s awareness that if something terrible were to occur, everything is relieved by his or her insurance policy. Adverse selection, on the other hand, refers to an individual’s predisposition of getting insurance because he will most likely have a use for it. Hence, those who are sick and unhealthy will more likely purchase a medical insurance than those who are healthy. Healthy people would most likely not buy medical insurance because they don’t need it and would consider it as elective and not extremely necessary, besides being an additional cost.
But as the development of medical technology and medicine proceeded, the costs of medical treatment has become high-priced. And with the growing need for medical care, particularly the older generation, more and more people knew that they have to get a good medical insurance policy to cover up for their medical expenses.