Healthcare history: How the patchwork coverage came to be
A shipyard's need for healthy workers, World War II wage freezes and attempts by the government to expand healthcare coverage led to our unique patchwork of coverage.
President Obama and others applaud after he signed the Health Care and Education Reconciliation Act of 2010. (Alex Brandon / Associated Press)
The workers needed to be in good health to be effective on the job, and Kaiser offered them care from doctors in company clinics and at company hospitals. The workers paid 50 cents a week for the benefit.
It was something new in industrial America — a bonus offered to attract scarce labor while wages were frozen during the war.
The war ended, the workers quit the shipyards, leaving behind hospitals and doctors but no patients. So the company decided to open the system to the public — and that's how generations of Californians who never heard of Kaiser shipyards have since gotten medical care.
It is just one example of the way America's health insurance system has grown into the strange patchwork program it is today.
Most of us get health insurance through our jobs, a system puzzling to the rest of the industrial world, where the government levies taxes and offers health coverage to all as a basic right of modern society. But for many Americans, their way feels alien — the heavy hand of government reaching into our business as some bureaucrat tells doctors and patients what to do.
We always seem to fight over the role of government in our healthcare. In 1918, California voters defeated a proposed constitutional amendment that would have organized a state-run healthcare program. Doctors fought it with a publication declaring that "compulsory social health insurance" was "a dangerous device invented in Germany, announced by the German Emperor from the throne in the same year he started plotting and preparing to conquer the world."
The amendment was defeated by a huge margin.
This year's presidential and congressional election campaigns will feature intense argument over the Affordable Care Act signed by President Obama in 2010, the most ambitious effort yet to bring health insurance to all Americans. Everyone is required to have health insurance, and all but the poorest citizens face a tax penalty if they don't comply.
For liberals, the act is a culmination of the dream to complete the work of PresidentFranklin D. Roosevelt's New Deal. For conservatives, many of whom scornfully refer to the law as Obamacare, it is big government run amok. The first battleground will be in theU.S. Supreme Courtnext month, when the justices hear arguments on whether it is constitutional for the federal government to make citizens buy health insurance.
The long-standing tension between public and private healthcare in America has produced a unique and confusing way to provide protection against the cost of ill health.
It was Teddy Roosevelt's Bull Moose party that first suggested, in the 1912 presidential campaign, that Americans would need help paying their medical bills.
Medicine was becoming safe and even effective. Doctors could treat typhoid and diphtheria. Hospitals were becoming places that could help you get better rather than serving as dumping grounds for the insane or warehouses for paupers.
Being able to treat sickness meant that healthcare started to cost more.
When FDR became president in 1933, the committees that developed the concept of Social Security for him also considered national health insurance. Roosevelt flirted with the idea but never threw political muscle behind it.
After Harry S. Truman became president in 1945, he called on Congress to provide national health insurance but could never bring it to a vote. Opponents included theAmerican Medical Assn., which in 1948 asked each of its members to kick in $25 to fund a campaign warning that Truman's "socialized medicine" plan could lead to socialism throughout American life.
Health insurance, when it did emerge on a mass basis, came from the business world, as exemplified by the Kaiser shipyard story. World War II-era employers faced government-mandated wage freezes to prevent them from competing with dollars for scarce workers, which would drive up prices and cause inflation. But the IRS allowed companies to offer benefits up to 5% of the value of wages without counting them as taxable income.
The ruling became permanent in 1954, creating the foundation for the insurance system we have today.
After the war ended, the powerful labor union movement focused on expanding health coverage as well as boosting wages. Health insurance became a standard feature in labor contracts. Elsewhere in the economy, nonunion employers too decided it was a good tool to attract workers.