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Ben Franklin and Health Insurance

Everyone looks confused when I begin my class lecture on private health insurance by showing a picture of Ben Franklin on the hundred-dollar bill and dedicating the lecture to him. Students seeking nurse practitioner degrees and doctor of nursing practice degrees alike have no idea why one of our Founding Fathers deserves this honor.

To reassure them that they are in the right class, I explain that Ben Franklin is credited with introducing America to an insurance business model which is basically the model we use for health insurance today. I get still more blank looks, so I describe colonial Philadelphia–many wooden homes and wood or coal fires the primary heat source. When a house burned down, it was a devastating loss to its occupants. Mr. Franklin was aware of a British “insurance” model under which people voluntarily paid into a fund dedicated to a specific purpose, and if one of the participants had an incident related to the fund’s purpose, the money to pay for it came out of the fund. The idea is that many small contributions pooled together provide sufficient monies to cover a few larger bills–because while everyone in the group is at risk, actual needs are relatively rare.

Today’s health insurance model is basically the same–a mutual arrangement with a fund from which money is used to pay for the needs of the participating population. In private health insurance, everyone is at risk for a serious medical incident, everyone pools their money (the “risk pool”), and when one of the participants needs to pay a medical bill, the money comes out of the pool to pay the bill. Simple … and, several hundred years later, oh so complicated.

However, everyone needs to understand this risk pool concept because as we design, redesign, modify, expand, shrink, and build back up health care services–whenever we create sophisticated and expensive technologies, whenever our attitude is that more health care is better, and whenever we fail to be responsible for taking care of ourselves–we impact the risk pool.

How does one understand the Affordable Care Act redesign? Follow the money and make sure it goes to pay for necessary health care services.

Judith Kunisch
West Hartford, Connecticut


1 thought on “Ben Franklin and Health Insurance”

  1. As I reread my essay it occurs to me that our health insurance pays for prevention of health problems – both primary prevention and secondary prevention. This left me wondering if the original fire insurance only covered the loss or was fire prevention included? And if this was the case, then the risk pool needed to increase in size …. and the contributions (read “premiums”) increased as well.

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