HEALTH INSURANCE, a form of insurance which insures its beneficiaries against need in time of illness and com pensates for the loss of employment during periods of illness. It is one of those departments of the general field of insurance which was taken up reluc tantly by private enterprise, on account of the difficulty of protecting the insur ance companies against fraud. Health insurance may be divided now into three distinct classes; commercial, mutual, and social. Commercial health insurance has developed only to a limited extent, and that only within the past few years, being generally connected with the busi ness of casualty companies. Mutual health insurance, commonly known as "sick and death benefit," has acquired vast dimensions in all civilized countries. It had its origin in the early "friendly societies" of Great Britain and the fraternal orders of this country. Mutual health insurance is based on distinctly co-operative principles. These co-oper ative enterprises in their turn, obviously, had evolved from the still earlier forms of mutual benefit associations, the guilds, which assured their members support during illness. Some historians find traces of such organizations having existed in Anglo-Saxon England. After the institution of the factory system of employment in England and this country, with its precariousness of livelihood, the mutual societies sprang up spontaneously all over both these countries among the working classes. As modern indus trialism appeared in other countries, and in the order of its appearance, these also developed similar working-class organi zations.
The objects that these societies first contemplated were the securing, in return for small weekly payments by the mem bers, of a weekly sum during sickness and a pension after a certain age. At first these weekly payments by the mem bers were uniform in amount, but with the accumulated experiences which fol lowed, the system of collecting higher payments in proportion to the ages of the members began to be adopted, it being recognized that liability to sickness in creased with age. On account of the disinclination of private enterprise to enter the field of health insurance, the British Government very soon began to interest itself in the welfare of the friendly societies, and assisted them in formulating scales of payments, based on statistics gathered by the Government itself, a task which was at that time be yond the capacity of any working-class organization. This government protec tion became all the more necessary be cause of the many fraudulent societies which, initiated by private individuals, preyed on the ignorance of the working people. Eventually the Government,
through the Registrar of Friendly So cieties, made itself responsible for the reliability of all genuine mutual aid so cieties, based on the principles which the Government itself had formulated.
Social health insurance is of much more recent origin than the mutual aid class of insurance, and generally implies state backing. On a broad scale, this form of health insurance had its origin in Germany, where it was instituted in 1884, largely through the sponsorship of Bismarck, who saw in this type of gov ernment paternalism an antidote to the growth of revolutionary Socialism. The idea was then adopted in other countries, in the following order: Austria, 1888; Hungary, 1891; Luxemburg, 1901; Nor way, 1909; Serbia, 1910; Great Britain, 1911; Russia, 1912; Rumania, 1912, and the Netherlands, 1913. In the above countries the system is compulsory, within the limits of certain industries, and on employees whose yearly incomes fall below a certain set minimum. In all these cases the government assumes only a part of the cost, amounting to various percentages in the different countries. Great Britain assumes two-ninths of the cost, but adds various other supplemen tary subsidies, which bring it up to one third. The beneficiaries are obliged to pay: men ten shillings a year, women eight shillings. Other countries base their subsidies on the wages of the policy holders, ranging from a third to one half. In all the employers are also com pelled to contribute, ranging from a third in Germany to a half in Hungary. The average period of the benefit is for twenty-six weeks.
In this country there has also been a rapid extension of social insurance as an idea, since 1911, in connection with the workmen's compensation movement in the various States. In 1915 the Ameri can Association for Labor Legislation drafted a tentative bill for State insur ance, which was brought up in the fol lowing year in the legislatures of Mas sachusetts, New Jersey and New York. In each case the bill failed being passed, but the result was to create wide public discussion in the press. The idea is now being pressed strongly by such organiza tions as the American Medical Associa tion, the American Public Health As sociation, the National Conference of Charities and Correction, and by many labor organizations, notably by the State federations of labor.