Hospitalization Insurance and Hospital Utilization

Burton A. Weisbrod, Robert J. Feiser

Research output: Contribution to journalArticlepeer-review


In Dallas, Texas, in 1929, Justin Ford Kimball, executive vice-president of Baylor University, originated a plan whereby Dallas school teachers paid $6 a year to the University Hospital and were extended hospital care without further charge [1, p. 5 ]. From this beginning grew Blue Cross plans, pioneers in the health insurance field. Commercial insurance companies became important sellers of health insurance after 1941. More recently, independent health plans such as those sponsored by trade unions and management have emerged. At least 1,150 different organizations provide voluntary health insurance today [2, p. 47]. At the end of 1957, about 121 million persons owned some form of hospitalization insurance. Ten years earlier the number was only 53 million [2, p. 41]. The growth and extention of medical care insurance shows no sign of slowing. Pressure upon the U.S. Congress to expand coverage among older persons is mounting. What consequences may be expected from continuation of the trend toward more comprehensive medical care coverage? The answer is surely as complex as it is important; in the present paper we hope to shed some light on the matter and to suggest directions for further research. Specifically we report the results of a statistical study of the impact of extended hospitalization-insurance protection on the utilization of hospital services. Our objective has been to consider the questions of how and to what extent people are likely to react to an increase in the availability of prepaid hospital services. Implications of such findings for the social costs of expanded health care, whether under governmental or private auspices, should be clear.
Original languageEnglish
Pages (from-to)126-132
JournalThe American Economic Review
StatePublished - 1961


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