Medical care in America changed rapidly from “isolation and custodial” to “recovery and cure”. As a result the cost of medicine increased dramatically.

Colonial to modern medicine...

The time period up to 1900 was an important time for medicine and developing the need for insurance. Medicine was not a “science” and often killed more people than it cured and until there was a reason to see a physician, there was obviously no need for insurance to pay for it. So, let’s see how medicine faired up to around 1900.

After the discovery of the Bahamas, and later Central and South America, by Columbus in 1492, John Cabot explored North American in 1497. It would be over a hundred years before the first permanent settlement in North America, Jamestown, appeared. It would be another 13 years before the Pilgrims aboard the Mayflower landed in Plymouth in 1620. The Mayflower had two physicians aboard, Miles Standish, the commander of the Mayflower, and Dr. Samuel Fuller.

In 17th century America there was no place for professional differentiating along the European lines. The lack of physicians led to a melting together of the different professions. Most were ship surgeons, barbers, or apothecaries. In the colony, midwives handled the obstetrical work. Midwives also served as nurses, pediatricians and helped lay out the dead.

Amongst the earliest immigrants were some physicians, but as the lure of wealth diminished so did the flow of academically trained physicians. After this first generation, apprenticeship was the chief mode of medical education. Almost all educated men had acquired some medical knowledge and they would practice or give advice. A man that wished to practice medicine did not need any certification. While most did have a period of apprenticeship, even that was not required. Up until the late 19th century, very few doctors had a college education.

In the 19th century medical facilities were informal with most patients being treated in their homes. However, even the smallest towns had poorhouses, where destitute people could live and receive limited medical care

"...the town expended $848.56 on the support of the poor plus $335.87 for the care of paupers 'at Hospital.'...The unfortunate who needed town aid...(had)...his name printed in the town report for all to see...If a pauper died, his funeral expenses were borne by the town."

In 1751, Dr. Thomas Bond and Benjamin Franklin founded the first American hospital, that was not also a poorhouse, in Pennsylvania “to care for the sick-poor and insane who were wandering the streets of Philadelphia”. Again, if you had money you were treated at home. It was not until 1765 before the first American medical school opened, The University of Pennsylvania School of Medicine, just down the street from the hospital.

During these early colonial and federal periods (Federalist Era was roughly 1789-1801 when the Federalist Party dominated American politics) “heroic medicine” (medieval medicine: purgings, bleedings, and high doses of toxic drugs with mercury, i.e. calomel) was at its peak and probably killed more than it “cured”. Due to the medical treatments available and the sense of self-reliance America had at that time, physicians were not widely accepted.

Irregular medical sects were popular worldwide but especially in America in the 19th century. One popular sect was started by Samuel Thomson, the Thomsonian System. It was based on steambaths and herbs. Another irregular medical sect was homeopathy. Samuel Hahnemann, a German physician, began practicing homeopathy around 1792 and published “Organon of the Rational Art of Healing” in 1810. Finally, Andrew Taylor Still started the practice of osteopathy and founded the College of Osteopathic Medicine in 1892.

By the late 19th century medicine was starting to become something people would want. It began to incorporate many of our modern ideas. Chemistry and biology had a significant influence and the medieval ideas of humors, purgings and bleedings were abandoned.

This was a boon time. Dr. Nathan Davis founded the American Medical Association (AMA) in 1847 to help develop professions standards and minimal educational requirements. Medical colleges were increasing their standards from just a few months training to several years and requiring a college degree for entrance. Naturally, because of the cost of added training and the ability to provide more effective service, physician costs escalated.

More significantly, in regards to the cost of medical care, was the transformation of hospitals. In the 1700s, the primary purpose of a hospital was for isolation and almshouses (poorhouses) was meant for custodial and medical care. Even Ben Franklin’s hospital was meant for the poor. For most of the nineteenth century the middle or upper-class was nursed at home. Even surgery was done at home.

Between 1865 and 1925 hospitals began to transform into expensive, modern hospitals of science and technology. As medicine advanced, sterile techniques improved, anesthesia for surgery, X-rays, and other breakthroughs became readily available, the hospital became the preferred provider for the middle-class. America saw the transformation from isolation and custodial to recovery and cure. Along with increasing costs!

Next, we explore how increased costs and acceptance of modern medicine makes insurance necessary.