Origins of American Health Insurance: A History of Industrial Sickness Funds.

• Author: Troesken, Werner
• Position: Brief article - Book review

* Origins of American Health Insurance: A History of Industrial Sickness Funds

By John Murray

New Haven, Conn.: Yale University Press, 2007.

Pp. xiv, 313. $40.00 cloth.

In Origins of American Health Insurance, John Murray tackles a big question: Why doesn't the United States have universal, government-provided health insurance? Murray approaches this question historically and focuses on a critical period in the American past, the Progressive Era (1900-1914). During this period, the United States probably came as close as it has ever come to creating a state-sponsored health insurance program. For most historians and students of the U.S. welfare state, the question of why the United States does not have universal, state-provided health insurance reduces to, Why were Progressive Era reformers unable to secure passage of such a program?

The standard answer to this question is that a combination of special-interest groups that included labor unions, big business, organized medicine, and the insurance industry defeated proposals for government insurance. Because this unholy alliance stood to lose from government-provided health insurance, its members organized to defeat and suppress the will of the electorate. In this standard story, the typical voter wanted some sort of government insurance because the existing modes of providing for workers in times of illness consisted of a patchwork of disorganized, underfunded, and largely ineffective industry- and union-backed sickness funds.

As Murray points out, though, the traditional story line has a number of problems, not the least of which is the fact that whenever government-provided insurance programs were put on referendum ballots, they were resoundingly defeated. Murray's primary area of focus, however, is not politics but economics. In particular, he analyzes the efficiency and effectiveness of privately provided sickness funds. For the people enrolled in them, sickness funds gave financial support to the afflicted worker and the worker's family. Although Murray is not the first scholar to consider the efficacy of these funds, he is among the first to consider them using the tools of modern economics, which leads him to radically different conclusions. His careful econometric and statistical analyses show that privately provided sickness funds worked reasonably well and protected a broad swath of the industrial labor force.

One of the book's most admirable and compelling aspects is the...