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Historical Highlights — 1930s
1938
During a meeting at Grace Hospital, the Detroit District Hospital Council votes to form an association to provide prepaid hospital services.
The Michigan Society for Group Hospitalization incorporates. It's established with $10,000 from Ford, Grace and Harper Hospitals and $5,000 from prominent Lansing citizens R.E. Olds and Joseph Gleason.
At the same time, the Michigan State Medical Society is working on a medical prepayment plan to reimburse physicians.
1939
The Michigan Society for Group Hospitalization opens for business in a small office on the 10th floor of the Washington Boulevard Building in Detroit. John R. Mannix is the first director. The plan becomes known as Michigan Hospital Service and later as Blue Cross of Michigan.
In the same year, offices open in Grand Rapids, Flint, Saginaw and Marquette.
The Michigan Society for Group Hospitalization signs its first subscriber. John F. Houlihan, manager of the Detroit office of the John Hancock Mutual Life Insurance Company, begins paying $1.90 a month for a contract that entitles him, his wife and children to 21 days of hospital care in a semi-private room during a 12-month period. In return, participating hospitals agree to accept reimbursement as payment in full for care.
Bills introduced at the request of the Michigan Society for Group Hospitalization and the Michigan State Medical Society to regulate prepaid health care plans pass in the state House of Representatives. Sponsors argue that the bills aren’t enabling legislation, only regulatory law. The plans are designated nonprofit and tax exempt, as are community-based hospitals. To justify the tax exemption, plans are referenced as charitable and benevolent in the laws, as are hospitals.
Bills pass the state Senate. During the month, the first Michigan Society for Group Hospitalization patient enters Grace Hospital for surgery.
Governor Luren Dickinson signs the bills into law and they become Public Acts 108 and 109 of 1939. He’s quoted in the Detroit Times as saying:
"I signed these bills with much satisfaction because they form the foundation of a new service which will afford to families of moderate income the assurance of adequate medical attention and hospitalization. Under present conditions, the very poor and the very rich are looked after. The poor are provided for through relief agencies and special appropriations for the care of the indigent. The rich have no trouble meeting the fees of the specialists."
The Detroit Free Press reports:
"The bills allow insurance companies and nonprofit medical and hospital corporations to offer family medical care for an agreed annual or monthly payment. Insurance companies are understood to be ready to enter the field at once, with policies based on an average rate of $12.50 a year premium for such protection for an individual and lower rates for each person in family groups."
The Michigan State Medical Society appoints six representatives to the Michigan Society for Group Hospitalization’s board of trustees.
