Americans and Compulsory Health Insurance

The United States almost had a universal health insurance system in 1914! Here is the story: When we think of a national medical insurance system, historians point to Otto von Bismark in 1884, Germany. With increased industrialization, there was not only great wealth but also great poverty. To fend off a socialist rebellion, as well as help increase productivity, Bismark instituted a plan for disability and sickness care. The plan included most employees and charged the worker 2/3rd of the premium, with the employer paying 1/3rd. You will see the relevance of this German innovation below.

In 1911, the American Association of Labor Legislation (AALL, a lobbying group) got legislation passed (at the state level) for disability. At the same time, England instituted medical care coverage for workers to pay for generalist doctor bills. Hospitals were charitable institutions and not often used. Specialists were not covered. Doctors were paid a fixed fee per patient per year regardless of how often the patient visited.

Having succeeded without much resistance with disability insurance, the AALL then drew up model legislation for health insurance for workers in 1912. It would have been compulsory, universal, and sponsored by the government. They involved the leadership of the American Medical Association (AMA) and received strong support. The president of the AMA was also the head of the U.S. Public Health Service which added strength to the support. The proposal was cruising to victory when the tide began to turn.

Citizens wondered whether “having the government interfere with our private life” was necessary. Unions, after some thought, realized that they were losing a benefit that they could bargain for (indeed, Samuel Gompers, founder of the American Federation of Labor, came out against it). Doctors in practice were gaining experience with the newly instituted disability insurance and were fighting for payment as well as seeing employers and insurers hiring their own doctors. Their fears of having the government inserting itself between them and their patients only worsened when they heard that in England doctors were practicing “assembly line medicine”. In short order, practicing physicians ran the AMA leadership out and government-sponsored health insurance became a third rail for the future AMA leadership.

Then, the U.S. entered World War I. The Wilson administration undertook a vigorous public relations campaign demonizing all things German. Those who opposed the plan quickly referred to it as the “German Plan” (if you want to stand your hair on end, look up Wilson’s Sedition and Espionage Acts as well as his Committee on Public Information).

In 1920, Warren Harding was elected president with a promise of a “return to normalcy”. This included a promise of no universal health insurance. Over the next several decades Presidents (even FDR) would avoid the issue. It was not until the Johnson administration that national efforts moved forward with Medicare and Medicaid in 1965. These programs took what was previously charitable care and provided government payment. Critics will point to the low fees and bureaucracy; advocates find it to be a simpler solution to the complexities of the rest of our system.

B. Dale Magee, MDWDMS curator