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Health Insurance Coverage for the Californian Employee

Where it All Began Due to the foresight and innovation of Justin Ford Kimball, employees for generations have enjoyed the benefits of employment based health insurance.

In 1929, Kimball enlisted the support of a group of teachers in Houston, Texas, and negotiated with Baylor University Medical Centre, Dallas, for 21 days of guaranteed medical care for each of these teachers in the event of their becoming ill. At $6 per year, this was the first group bargained health insurance plan of its kind.

The methodology used by Baylor Medical Centre was one known as 'community rating', where the premium was based on the claims made by the entire group, as opposed to the alternative method of calculation basing premiums on 'experience rating' or the claims possible by an individual.

In general it is easier for insurers to evaluate the liability they have toward an entire group rather than the specific liability to an individual, and so the premiums payable for group insurance are often far lower. In addition to the sheer bargaining power of a number of individuals, and the lower administrative cost involved in insuring a group, this often results in substantial reductions in the cost of health insurance.

Wage freezes during World War II saw an increased desire by employers to provide alternative incentives to attract employees, and health insurance benefits proved to be a successful lure. Kimball was eventually asked to assist in further development of group insurance, and he was an integral part of the foundation that organizations such as Blue Cross and Blue Shield were built on.

 Employers Haven't Looked Back Until Now

Since then, employers have offered employees a variety of health insurance options, as additional benefits for employment, but in later years with a downturn in the economy, employers have increasingly sought to reduce their labor costs by requiring more employee responsibility for the cost of health insurance.

Often employees have been forced to bear the entire burden of health insurance, albeit group based insurance, and with the 79% increase in the cost of health insurance, even the securely employed have chosen to remain uninsured. At times employers simply terminated the insurance of employees who ceased working for them in some fashion, and this left the dependants of the employees inequitably suffering detriment when deprived of their health insurance.

To combat this action the US Congress enacted the Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985, and guaranteed recipients of health insurance benefits that their insurance coverage would be continued without interruption.

The Californian Senate has routinely acquiesced to employees paying for their own private health insurance, but has consistently refused to pass bills that impose a restriction on how much an insurance company can charge a recipient. Considering the generous donations from insurers to the individual campaigns of members of the legislature in California, it has been said that this practice is sure to continue well into the future, in the pursuit of the preservation of corporate profits at the expense of the consumer.

Particularly in the case of increased technological advances and the subsequent redundancy of many jobs, coupled with medical advances allowing individuals to lead longer lives, health insurance benefits that have been accruing for many years will remain a valuable asset for the individual worker and their dependents.

Even though it may be very difficult to maintain health insurance during times of financial stress, it appears that every effort to remain insured is well advised considering the number of bankruptcies due to liability for medical costs. 


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