“It’s 1929 and here comes the Great Depression.”
Going into the 1930s, things in America just kept getting more difficult. The Great Depression put a strain on everything and had its effect on the health insurance industry as well. One thing that did come from this was the forming of Blue Shield and Blue Cross which eventually led to them combining together.
Hospital Service plans started turning up more that helped with hospital revenues as their revenue numbers had dropped. By 1933, 26 of the plans were in operation. These plans were viewed as a prepayment of services versus an insurance. Upon deeper review in 1933, the New York state insurance commissioner decided that the plans should be viewed as insurance.
These plans were a precursor to the Blue Cross. Blue Cross plans had to provide subscribers with a free choice of physician and hospital. A tax exemption made it great for low-income individuals.
Blue Shield plans in short, offered medical and surgical benefits for hospitalized members, while certain plans included doctor office visits. Similar to Blue Cross plans, some Blue Shield plans offered service benefits to low-income subscribers which allowed the plans to directly reimburse the physicians for their service.
Another option that came about from the 1930s was the Social Security Act of 1935. It provided public support for the retired and elderly. Also, states could develop provisions for either or both unemployed or disabled.