Before the development of medical expense insurance, patients were expected to pay health care costs out of their own pockets, under what is known as the fee-for-service business model. During the middle-to-late 20th century, traditional disability insurance evolved into modern health insurance programs. One major obstacle to this development was that early forms of comprehensive health insurance were enjoined by courts for violating the traditional ban on corporate practice of the professions by for-profit corporations. State legislatures had to intervene and expressly legalize health insurance as an exception to that traditional rule. Today, most comprehensive private health insurance programs cover the cost of routine, preventive, and emergency health care procedures, and most prescription drugs (but this is not always the case).
Supporters of a public plan, such as Washington Post columnist E. J. Dionne, argue that many places in the United States have monopolies in which one company, or a small set of companies, control the local market for health insurance. Economist and New York Times columnist Paul Krugman also wrote that local insurance monopolies exist in many of the smaller states, accusing those who oppose the idea of a public insurance plan as defenders of local monopolies. He also argued that traditional ideas of beneficial market competition do not apply to the insurance industry given that insurers mainly compete by risk selection, claiming that "[t]he most successful companies are those that do the best job of denying coverage to those who need it most."
Prior to the Patient Protection and Affordable Care Act, effective from 2014, about 34 states offered guaranteed-issuance risk pools, which enabled individuals who are medically uninsurable through private health insurance to purchase a state-sponsored health insurance plan, usually at higher cost, with high deductibles and possibly lifetime maximums. Plans varied greatly from state to state, both in their costs and benefits to consumers and in their methods of funding and operations. The first such plan was implemented In 1976.
Health insurance in the United States is any program that helps pay for medical expenses, whether through privately purchased insurance, social insurance, or a social welfare program funded by the government. Synonyms for this usage include "health coverage", "health care coverage", and "health benefits". In a more technical sense, the term "health insurance" is used to describe any form of insurance providing protection against the costs of medical services. This usage includes private insurance and social insurance programs such as Medicare, which pools resources and spreads the financial risk associated with major medical expenses across the entire population to protect everyone, as well as social welfare programs like Medicaid and the Children's Health Insurance Program, which both provide assistance to people who cannot afford health coverage.