The Origins of Employer-Sponsored Health Insurance in
Roosevelt allegedly had power over Social Security
during the 1930s and along with that a chance to enact universal health care.
However, President Roosevelt did not enact a universal health care coverage for
several reasons. If the Social Security Act of 1935 was connected with health
insurance it would not have passed by the American Medical Association. In
order to protect Social Security, health care was removed from the Social
Security Act of 1935. President Roosevelt also had personal influences. Harvey Cushing, along with two other
physicians that he was close to, greatly opposed federal health insurance and
would discuss their grievances with Roosevelt often. Forces, both political and
personal, negatively impacted the possibility of universal health care in the
With the removal of health care from the Social
Security Act of 1935 and the need to counteract the high cost of illness,
private insurance emerged in the early 1930s. Blue Cross and Blue Shield was at
the forefront of this movement but was unique because it was a nonprofit. As
profit increased, commercial insurers developed and expanded their reach.
Commercial insurers were able to provide healthy, low-risk participants with
lower cost while being able to subsidize the high health costs of sick,
high-risk participants. World War II led to a change in labor structure and
demands. This, along with wage raise control, inflation in the economy,
competition in pay, led to incorporating insurance with employment as a way to
expand benefits for workers. Benefits were part of wage package and unions
would negotiate to include health insurance. Another large benefit from
employer-sponsored insurance was that it was not taxable income to workers.
Because of this large tax benefit to employees, the federal government agreed
to continue with privatizing health insurance by delegating it to private
employers and insurance companies. With private health insurance becoming
profitable and necessary, there was a large growth in enrollment. Enrolled in
private health plans increased from 20.6 million to 142.3 million between 1940
and 1950. This growth can also be seen in 2000 when insurance covered 66.8
percent of nonelderly Americans.
AMA had strong and intense opinions. The AMA believed
that national health insurance was socialized medicine. With rising tension
from World War 2, the term socialized medicine was used as fearful tactics with
connections to socialism and communism. The AMA believed that national health
insurance would affect the patient and physician private and sacred relations.
This would lead to a physician having lower pay and control while patients would
surrender their liberties and receive poor quality medicine. The Blue Cross
created an alternative to national health insurance by collecting a monthly
fee, allowing a person to receive treatment.
National Education Campaign was launched by the AMA
to counteract the Truman administrations promotion of national health
insurance. National Education Campaign strongly promoted private health
insurance. AMA was a powerful force and had a large reach in the 1930s. The AMA
could set an agenda, generate resources, and mobilize campaigns in nearly every
state, city, and small town in America. The AMA also held power over doctors by
controlling the county medical society, which was needed to be a member of the
state medical society and would allow for privileges in hospitals. These county
societies become part of the campaign against national health care. The AMA
also had powerful allies with Blue Cross, the American Hospital Association,
the Insurance Economic Society, pharmaceutical and drug manufacturers, and the
Chamber of Commerce. The AMA tactics include using posters, pamphlets, form
resolutions, speeches, entered electoral politics, approaching local
newspapers, letters, telegraphs, phone calls and publicity materials. The AMA
power can be seen in the significant drop in support for national health
insurance from 1945 to 1949. Support dropped from 75 percent to 21 percent in
just 4 years. AMA efforts greatly change how health care is managed in the US.