What Was The Original Purpose Of Health Insurance? 
Health insurance can trace its roots back to the 1920 's in the US . The first health insurance was introduced inTexas to offset the costs of hospital stays . Blue Cross was founded specifically for this purpose . Several years later , Blue Shield was added to help offset doctor 's charges . As technological advances in the medical field particularly after WWII , costs rose rapidly . The idea of managed care was advanced with the purpose that if people would regularly schedule appointments to doctors , they could determine high risks much faster and avoid large hospital costs . In the 1970 's , the HMO -LRB- Health Maintenance Org -RRB- gained favor and under President Nixon a bill was passed that would require employers with greater than 25 employees to offer coverage through an HMO . By the early 1990 's , the demand for the flexibility of a traditional plans in addition to the cost saving of the HMO plans , brought us the PPO and the POS . Doctor Office Visit copays and prescription drug copays became the norm . The number of laws governing healthcare and what policies were required to pay increased nearly 1000 % . Technological advances were happening at a `` break-neck '' pace . With each law requiring more health issues to be covered and the advances in technology , ultimatelycaused premiums to increase dramatically . In 1993 , in TN , a $ 1000 deductible for a 35 year old male was $ 41 per month . How things have changed ! The government 's answer was to fix the financing mechanism , concluding that they could control costs by forcing the financing -LRB- aka insurance companies -RRB- to follow strict regulations . Sounds great except : - insurance companies were required to minimize the amounts they paid doctors , hospitals , etc -LRB- providers -RRB- ; while providers were having to serve twice as many patients for the same money and go into $ 100k plus in debt just to get through med school . Can you say train wreck?Which brings us to where we are today ! That maybe a bit more than you asked in questioning the original purpose of health insurance , which in simple terms , was set up to exchange premium for the possibility of an expensive hospital stay in the future . 