The Origins of Employer Provided Health Insurance: One Story
If any capitalist really lived up to Ayn Rand's ideal of a visionary, creative entrepreneur it was Henry J. Kaiser. During the Great Depression and the Second World War he repeatedly delivered high quality construction projects and goods to the US Government and other customers. After the war he supplied appliances, automobiles and construction materials to the nation. If the reconstruction of Iraq had been handled by Henry J. Kaiser rather than Hallibutron and Bechtel you can bet the outcome of our unfortunate adventure in that country would have been better.
If any capitalist was a stranger to Ayn Rand's "objectivist philosophy" - really just a series of justifications for short sighted greed and arrogance on the part of the rich - it was Henry J Kaiser. Toward the end of the Great Depression he won the contract to construct the Grand Coulee Dam. The dam is located in the highly picturesque and godforsaken part of western Washington Sate called the channeled scablands. There is no there there.
To construct the dam he imported large drafts of unskilled workers, mainly from the southern states. These workers were mostly former sharecroppers who were as unaccustomed to living in modern industrial civilization as Mexican peasants are today. They certainly had no idea of what modern medical care was.
Kaiser could have gotten away with leaving these workers to their own devices and, no doubt, the market would have spontaneously drawn qualified physicians to the area and magically constructed hospitals. Or more likely, the price of medical care in the area could have risen to a level where Kaiser's workers decided to forego health care and hope for the best.
Instead, motivated by self interest and paternalism Kaiser formed a relationship with Dr Sydney Garfield who had already founded a hospital and health maintenance organization for workers on another water project in California. In WWII, when Kaiser ran the shipyards in Richmond, California, he brought Dr. Garfield and the hospital/clinic along with him. Again the clientele were largely former sharecroppers who had minimal introduction to modern medicine.
At its foundation the essence of Kaiser's and Garfield's plan involved not only health insurance, which is a purely financial arrangement, but also the construction of hospitals and clinics and the provision of health care by an organized medical group. The plan worked so well that after the War other employers paid to have their employees covered.
The rest is history, some good, some not so good. This post is not meant to endorse or to condemn Kaiser Permanente which has inherited this legacy. It is meant to challenge the current opponents of government intervention in health care and other areas of social welfare:
Show me seven modern "entrepreneurs" who even come close to Henry J Kaiser and I might begin to think about supporting unfettered Capitalism. Carly Fiorina does not count.
Okay, I don't have seven...but how about Hewlett and Packard...?
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Two. Unfortunately both gone now.
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