Celebrating 75 Years:
A look at healthcare in the 1930s
In 1930 the average cost of a hospital room was $4 to $6.50 (roughly $62 to $93 in 2006 dollars, using the Consumer Price Index). Further, the average length of a hospital stay in 1933 was 14 days, meaning that a patient faced a hospital medical bill of around $91 (the equivalent of $1,092), not including the physician’s fees. The Great Depression was at its peak, and in some areas, up to 40 percent of the population was unemployed. As a result, many Americans simply did without medical care.
With physician visits declining and 38 percent of private hospital beds unoccupied, doctors’ incomes dropped and hospitals became financially unstable. This financial crisis, along with the need to help people access healthcare, led to the creation of the Blue Cross Plan (a prepaid hospital plan) developed by the American Hospital Association in 1933.
In this same year, PacificSource got its start. A group of 21 physicians who staffed and operated Pacific Christian Hospital in Eugene, Oregon, founded Pacific Hospital Association (PHA)—the former name of PacificSource Health Plans. The following year, the hospital was sold, making PHA a separate entity.
Unfortunately, information regarding PHA’s premium costs during these early years is not available. A good example of what Americans paid, however, is provided by Associated Hospitals of Essex County, Inc. (the precursor to Horizon BlueCross Blue Shield of New Jersey), which in 1933 offered subscribers 21 days of prepaid hospital care for a $10 annual premium.
The Blue Shield program followed in1939 to cover physicians' expenses. The California Physicians' Service (CPS) was the first such plan, offering physicians' services for $1.70 per month to employees earning less than $3,000 annually.
While private, voluntary health insurance grew in popularity, Congress debated but did not pass legislation for national health insurance. The American Medical Association (AMA) actively campaigned against all forms of health insurance, private or government-directed. In the late ‘30s, they modified their position regarding voluntary health insurance, but remained opposed to proposals for national health insurance, viewing it as socialized medicine and a threat to physicians’ professional autonomy.
Unless otherwise stated, all text and images © 2006 PacificSource. All rights reserved.