Although private health insurance in the United States dates back to the 1860s, the modern era of health insurance in this country did not begin until 1929 when a group of schoolteachers contracted with Baylor Hospital in Dallas, Texas, to provide room, board and specified medical services at a predetermined monthly rate.

Congress' establishment of government-financed healthcare for elderly Americans (Medicare) in 1965 spurred tremendous growth in geriatric, or elderly, care efforts and its associated costs. Medicare now provides hospital and medical benefits to persons age 65 and older and to some others. The original Medicare Plan has two parts, Part A for hospital services and Part B for physician services, with certain eligibility restrictions. Part A covers the hospital costs, and care in skilled nursing facilities, psychiatric hospitals, and hospice care. Although Part A is free if an individual qualifies for Medicare (see below), it can...