Kimball’s model was based on the assumption that hospitals were nonprofit community institutions. The insurance company he created was a nonprofit, as well. His method was to make sure hospitals got paid what they spent on patient care.
In practice, Kimball’s approach meant health insurance paid the hospital bill, no matter how high the charges. That made health insurance an ally of providers rather than patients, helping to push up the cost of care. It set health insurance in a direction that took 50 years to change.