By 1945 Blue Cross had captured 59% of the health insurance market. The idea of prepaid health insurance was solidified on the American landscape in 1954, when the Internal Revenue Code codified the deductibility of health insurance payments. The employer deduction significantly reduced the cost of health insurance for consumers eligi- ble for an employer-provided group plan. The federal government cast the Blue Cross Blue Shield approach in regulatory concrete in 1965 when Congress passed the Medicare and Medicaid programs. Medicare copied the Blue Cross Blue Shield pay-as-you-go approach to health insurance and applied it to almost all Americans over 65. Ironically, at the time, relatively.
