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Hospitals, Insurance, and the American Labor Movement: The Case of New York in the Postwar Decades

  • David Rosner (a1) and Gerald Markowitz (a2)

In the summer of 1989, an extended strike by the various “Baby Bell” telephone companies, including those of New York, Massachusetts, California, and thirteen other states in the Northeast, Midwest, and West Coast, brought to public attention the importance of health and hospital insurance to the nation's workers. In what the Los Angeles Times headline proclaimed was a “Phone Strike Centered on the Issue of Health Care,” workers at NYNEX, Pacific Bell, and Bell Atlantic went out on strike over management's insistence that the unions pay a greater portion of their hospital insurance premiums. In contrast to their willingness to grant wage concessions throughout most of the 1980s, the unions and their membership struck to protect what was once considered a “fringe” benefit of union membership. What had been a trivial cost to companies in the 1940s and 1950s had risen to 7.9 percent of payroll in 1984 and 13.6 percent by 1989. Unable to control the industry that had formed around hospitals, doctors, drug companies, and insurance, portions of the labor movement redefined its central mission: the fringes of the previous forty years were now central concerns. In the words of one local president engaged in the bitter communication workers strike: “‘It took us 40 years of collective bargaining’ to reach a contract in which the employer contributed [substantially to] the costs of health care, ‘and now they want to go in one fell swoop backward.’”

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This essay was adopted from Markowitz, Gerald and Rosner, David, “Seeking Common Ground: A History of Labor and Blue Cross,” Journal of Health Politics, Policy, and Law 16 (Winter 1991): 695718.

1. See “Phone Strike Centered on Issue of Health Care,” Los Angeles Times, August 9, 1989, 1.

2. “Facing Off over Health Care Benefits,” Wall Street Journal, August 11, 1989, B1.

3. “Phone Strike Centered on Issue of Health Care,” Los Angeles Times, August 9, 1989, 1. See also “NYNEX Reaches Accord with Striking Unions,” Wall Street Journal, November 14, 1989, A3.

4. The system of insurance coverage is even more complex than we have described here. For example, Blue Cross is a hospital insurance system paying solely for the “hotel” costs of a patient's hospital stay: bed, nursing, operating room, and other expenses. It does not pay for doctors' services and an entirely different insurance system covers most of the physicians' charges in the hospital. There are a host of other insurance companies, such as Blue Shield, Group Health Insurance, Aetna, and others.

5. Reeve, Arthur B., “The Death Roll of Industry,” Charities and the Commons 17(1907): 791.

6. Editorial, “Slaughter by Accident,” The Outlook 78 (October 8, 1904): 359.

7. A Strike for Clean Bread,The Survey 24 (June 18, 1910): 483–88; “Investigations have disclosed the Fact that Unhealthy and Poisonous Bread is Made in Non-Union Bake Shops,” The Woman's Label League Journal, June 1913, 13; See also Rosner, David and Markowitz, Gerald, “The Early Movement for Occupational Safety and Health,” in Leavitt, Judith and Numbers, Ronald, eds., Sickness and Health in America, 2d ed. (Madison, Wis., 1985), 507–21. See also Rosner, David and Markowitz, Gerald, eds., Dying for Work: Workers' Safety and Health in Twentieth-Century America (Bloomington, Ind., 1987), and Markowitz, Gerald and Rosner, David, eds., “Slaves of the Depression: Workers’ Letters about Life on the Job (Ithaca, N.Y., 1987) for other work detailing the concerns of workers in safety and health in the twentieth century.

8. Montgomery, David, The Fall of the House of Labor (New York, 1987), 192.

9. Kalet, Anna, “Voluntary Health Insurance in New York City,” American Labor Legislation Review, June 1916, 142, quoted in Sydenstricker, Edgar, “Existing Agencies for Health Insurance in the United States,” Bulletin No. 212, United States Department of Labor, Bureau of Labor Statistics, June 1917 (Washington, D.C., 1917), 430.

10. Kalet, Anna, “Voluntary Health Insurance in New York City,” American Labor Legislation Review, June 1916, 143. See also Chapin, H. C., The Standard of Living in New York City (New York, 1914), 192. In other studies of other communities, it was found during the early decades of the century that upward of 60 percent of workers had health insurance plans either through unions or lodges. See Sydenstricker, “Existing Agencies for Health Insurance,” 433.

11. Sydenstricker, “Existing Agencies for Health Insurance,” 434.

12. Some of these groups, such as the Workmen's Circle, closely affiliated with the Socialists, are still around today. The Communist party supported the International Workers' Order, which broke off from the Workmen's Circle in 1931. It was forced out of existence by the New York State Insurance Department in the early 1950s because of its affiliation with the Communist party. We are now tracing its history.

13. See Trauner, Joan B., “From Benevolence to Negotiation: Prepaid Health Care in San Francisco, 1850–1950,” Ph.D. diss., University of California, San Francisco, 1977, for a detailed discussion of the centrality of the fraternal societies in the development of prepaid care in that city. See also Sydenstricker, “Existing Agencies for Health Insurance,” 469. Sydenstricker pointed out the difficulty of establishing accurate data on the overall importance of the fraternal and union plans and that few studies had been conducted to determine their adequacy. But he believed that existing data suggested that the percentage of workers who had some form of health insurance was large (432–34).

14. Sydenstricker, “Existing Agencies for Health Insurance,” 471.

15. Arguments abound among historians as to the reasons that such organizations as the Knights of Labor or the American Federation of Labor opposed government involvement in social protection for workers and their dependents. Some maintain that American labor came to maturity well before the development of an effective central state, thereby creating a philosophy of independence. Others see American beliefs in laissezfaire and individualism as being the major influence; still others explain the opposition to government arising from the pluralistic nature of the membership in the American labor movement. See Rogin, Michael, “Voluntarism: The Political Functions of an Anti-Political Doctrine,Industrial and Labor Relations Review 15 (July 1962): 521–35, cited in Mink, Gwendolyn, Old Labor and New Immigrants in American Political Development (Ithaca, N.Y., 1986), chap. 1.

16. Starr, Paul, “Transformation in Defeat: The Changing Objectives of National Health Insurance, 1915–1980,” in Numbers, Ronald L., ed., Compulsory Insurance: The Continuing Debate (Westwood, Conn., 1982), 120.

17. Dublin, Thomas, Women at Work: The Transformation of Work and Community in Lowell, Massachusetts, 1826–1860 (New York, 1979).

18. Robert Asher, in Rosner and Markowitz, eds., Dying for Work.

19. Derickson, Alan, Workers' Health, Workers' Democracy: The Western Miners' Struggle, 1891–1925 (Ithaca, N.Y., 1988).

20. Klem, Margaret C., Prepayment Medical Care Organizations, Federal Security Agency, Social Security Board, Bureau of Research and Statistics, Bureau Memorandum Number 55, Washington, D.C., June 1944, 117.

21. Klem, Margaret C. and McKiever, Margaret F., Management and Union Health and Medical Programs, U.S. Department of Health, Education, and Welfare, Public Health Service Publication no. 329, Washington, D.C., 1953.

22. We do not see it as our mandate to detail the history of medical practice and hospital care during the 1930s. Suffice it to say, the hospitals and physicians themselves were undergoing their own internal struggles over a range of economic and political issues. During the 1930s, the long-standing opposition of the American Medical Association to group practice, national and compulsory health insurance, and “contract” practice intensified and those advocating such programs were often accused of sponsoring “socialized” medicine. In all of its actions, the AMA sought to protect the autonomy of the practicing physician. The hospital community at this time was struggling through its own financial crisis as demand increased and income dwindled. Within this context, the first Blue Cross and Blue Shield plans were organized and they incorporated the concerns of the professionals who backed them. BC/BS promised a way out of the hospitals' and doctors' dilemma for, while providing a stable source of income to their members, they neither depended on government nor, in the words of the medical community of the 1930s, “sacrificed the autonomy” of the doctors.

On the local level, the medical community was involved in a number of parallel efforts to counter the growth of group practice and calls for national health insurance. But it was also involved in gaining a greater say in a program of direct interest to labor: the administration of workmen's compensation. It was here that labor and medicine had its most intense and involved relationship and where the first overtures from the medical community to labor first developed.

23. Before the development of Blue Cross programs, there was no insurance alternative for labor other than commercial insurance and unions were wary of commercial insurance because of their antagonistic encounters with insurance carriers in Workmen's Compensation proceedings.

24. Klein and McKiever, Management and Union Health and Medical Programs, 7.

25. Dan Fox notes the developing relationship between labor and organized medicine in the 1950s. It appears from this correspondence that, in New York at least, the relationship can be traced to the 1930s and the debates around Workmen's Compensation. See Fox, Daniel, Health Policies, Health Politics: The British and American Experience, 1911–1985 (Princeton, 1986), 195–97. See Woll to Elliott, May 1, 1934 (Elliott Papers, Blue Cross Archives; hereafter referred to as Elliott Papers). Also, Anon to Arthur Bedell, May 3, 1934, Elliott Papers.

26. Elliott to Woll, January 31, 1935, Elliott Papers. “I am sure that it is the opinion of the men in medicine that the workman should receive sufficient compensation for their labors to enable them to provide themselves with the necessities of life, including the reasonable compensation for needed medical care,” Elliott concluded.

27. Woll to Elliott, February 5, 1935, Elliott Papers.

28. Empire Blue Cross Archives, New York City.

29. See, for example, Murray Sargent, director of New York Hospital, to Louis Pink, November 22, 1947, complaining to the president of Blue Cross that Local 65 has organized its own “Security Plan” covering 15,000 workers and 30,000 more dependents. Pink replied that Sargent should not worry too much about the extension of this plan to more members because of the poor experience such union-sponsored plans had after the first year. “I do not think this sort of thing is too serious unless it should grow, and I do not think it will.” See Pink to Sargent, November 25, 1947, in Pink Papers.

30. Report of UAW-CIO Health Committee, 7th Annual Convention, UAW-CIO, Chicago, August 1942.

31. Louis H. Pink, “New York Blue Cross Sets Pace for Employer-Union Cooperation,” address before Hospital Association of New York State, June 11, 1946, Pink Papers, Blue Cross Archives.

32. Saul Mills to Louis Pink, March 16, 1943, Pink Papers.

33. See Conference Notes, “April 12, 1943 Saul Mills and Martin Segal representing CIO Council. Mr. Pink, Van Dyk, Sesan, Thomson, Keller, deSocarras, Breed,” in Pink Papers.

34. Ossip Walinsky to Louis Pink, June 17, 1946, Pink Papers. He noted that “the hospitalization service is represented right in our office” and “the records of all shop employees are constantly being checked as against the union membership on our records.”

35. New York Times, April 2, 1947, 16. See also ibid., April 8, 1947, 36. Here Blue Cross acknowledged the importance of this agreement and went on to note the “inclusion of hospitalization plans in the welfare programs of many unions.”

36. See Shefter, Martin, “Political Incorporation and the Extrusion of the Left: The Insertion of Social Forces into American Politics,” (manuscript) to be published in Studies in American Political Development, vol. 1, for a fascinating and detailed account of the politics of New York City in the postwar period.

37. Tilove, Robert, “Recent Trends in Health and Welfare Plans,”Proceedings of New York University Third Annual Conference on Labor,[c. 1950],145.

38. See Fink, Leon and Greenberg, Brian, “Organizing Montefiore,” in Reverby, Susan and Rosner, David, eds., Health Care in America: Essays in Social History (Philadelphia, 1979).

39. New York Times, May 20, 1956, 88.

40. Ibid., November 19, 1957, 35.

41. Ibid., October 1, 1957, 35.

42. Ibid., November 19, 1957, 35.

43. Ibid., January 6, 1958, 58.

44. Ibid., December 27, 1957, 18. Given this kind of opposition, it is not surprising that the New York State Insurance Commissioner rejected Blue Cross's rate-increase request at the end of January 1958.

45. Ibid., June 3, 1958, 33; see also ibid., June 8, 1958, E9. Bernard Greenberg, an economist for the United Steel Workers of America, spoke on behalf of the State CIO Council and the State Federation of Labor: “Labor in New York insists that Blue Cross policies must be directed away from the single-minded concern with meeting unquestionably every demand of the hospitals and toward a balanced view which impartially gives equal weight to the needs of hospitals, subscribers and the public interest.”

46. Ibid., June 18, 1958, 1.

47. The new members of the Blue Cross board were Thomas Carey, district business manager of the International Association of Machinists; Louis Hollander, vice president of the Amalgamated Clothing Workers' Union; and Charles Zimmerman, a vice president of the International Ladies' Garment Workers Union. The existing member was Harold J. Gamo, secretary-treasurer of the AFL-CIO.

48. New York Times, May 10, 1959, 69; ibid., June 10, 1959, 38.

49. Ibid., May 6, 1959, 43.

50. Fink and Greenberg, “Organizing Montefiore,” 226–44.

51. New York Times, May 22, 1959, 14. One of the first labor spokesmen to give testimony at the hearings over Blue Cross rate increases in May 1959 was Leon Davis, whose hospital workers were then in the midst of a vicious and prolonged struggle with the voluntaries. He demanded that the hearing be adjourned until the strike was settled.

52. New York Times, May 23, 1959, 50.

53. Ibid., June 21, 1959, 1. In the end, Blue Cross substantially prevailed against this opposition and the State Insurance Commissioner granted an increase of 26.5 percent.

54. In the late 1960s hospitals and Blue Cross would become the focus of academic and activist critiques. See, e.g., Law, Sylvia, Blue Cross: What Went Wrong? (New Haven, 1974); various publications and pamphlets of the Health Policy Advisory Center (Health PAC), especially The American Health Empire (New York, 1971).

55. New York Times, May 23, 1959, 50.

56. Selig Greenberg, “Crisis in the Hospitals,” The Progressive, May 1961, 33.

57. New York Times, September 27, 1959, IV:9.

58. Ibid., September 21, 1959, 1, 22.

59. Ibid., December 31, 1959, 19.

60. Ibid., April 30, 1960, 1, 10.

61. Ibid., August 3, 1960, 31.

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