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Professor’s book debunks popular view of health insurance system |
| By
Cynthia Nowak |
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Dec 17, 2007 |
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| Murray |
Sometimes, observed Dr. John Murray, professor of economics, a person can shed new light on a complex issue by simply rephrasing a question.
Take the not-so-simple matter of health insurance in the United States, the subject of Murray’s new book,
The Origins of American Health Insurance: A History of Industrial Sickness Funds, published this year by Yale University Press. “Historians who address the issue have usually skipped over the topic of sickness funds,” he said. “They tried to answer the question of why we don’t have health insurance like the Europeans do. The question I asked was how we ended up with the system we have.
“The questions sound very similar, but there are differences that lead to different answers.”
Thus is Murray’s revisionist stance, which reviewers in academia have called startling and strikingly original. “There’s enough data out there to support the study of sickness funds, but the information is scattered around,” he said. “Sometimes it seemed as though earlier historians researched their books from low-hanging fruit.”
First the definition: Today’s American employer-run health insurance originated in the 19th-century development of sickness funds, a kind of disability insurance run by labor unions, fraternal organizations and employers. “The main benefit was cash payment given when a worker couldn’t work,” Murray explained.
Given the almost Dickensian state of medicine 120 years ago, the funds didn’t include health-care practices as those understood today. “The main role of doctors was to certify employees fit for a return to work,” he said. “That surprised me, although there was a pretty sharp distinction between doctors paid by insurers — who wanted to get workers back on the job — and those paid by the insured, who were more likely to allow employees to rest a while longer.”
Social progressives of the era, however, found little support for a government-run health insurance system, based primarily on the German model, Murray said. “Basically, people liked the sickness funds, which were pretty good at what they did. One consideration was price. If you look at the record, you’ll find that they were relatively cheap, costing about one percent of a pay packet.”
Although the funds occasionally offered hospital and surgical benefits, he said, “the great thing they did was to allow workers to take time for rest and recovery, which they wouldn’t do without some kind of income.”
Murray discovered, in fact, an inverse relationship between the percentage of workers who made claims and the length of their absence: “The more workers who made claims, the shorter the absences. They were taking time off to recover, rather than not taking time off, followed by a long time off for more serious illness.”
Thus, the progressives’ enthusiasm for a European-style compulsory system wasn’t shared by the average worker, Murray said. “A 1918 statewide referendum in California was defeated by a 3-1 margin. The big problem in that World War I era was the perception that the plan would be just like what the Germans had, even though progressives gave it the same name as the British system.
“It was still much more expensive, though, than the sickness funds.”
Murray is aware of the topicality of his book, which traces the history of the sickness funds through the rise of group plans — Blue Cross, Blue Shield — and onto today’s HMOs, but said, “I wrote it to fill what I saw as a gap in the subject.”
That didn’t prevent him from including mention of the current debate on health insurance: “At the end of the book, I tried to point out the tendency for today’s politicians to argue the case one way or the other by wild exaggeration or by anecdote; neither is very persuasive.”
The history of a nation’s health insurance creates a culture, he noted. “Other countries allocate a pot of money for health insurance, which has to stretch to cover the need. In this country, our cost control for health care is more or less non-existent. I think there will be improvements around the edges — Medicare and Medicaid, for example, were clever creations, even though they have their own problems. You could probably come up with a similar system of health insurance that’s portable and covers everyone.
“But there will always be some kind of tension regarding coverage in whatever system we ultimately end up with.”
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