How did Makeup, WWII & Communism Create U.S. Healthcare?


What happens when you combine a weird history of makeup, World War II, and the threat of Communism? …Well….oddly enough you end up with an
employer based health insurance system. Now I know I can’t stop you from engaging
in the polite civil debate YouTube comments are known for, but arguing about the current
state of our healthcare system isn’t really what this episode is about. Instead, we’re going to focus on how the
US healthcare system emerged due to a strange set of historical circumstances. Now, in the US almost 50% of people with health
insurance are covered through their employers. But considering jobs don’t pay for other
vital expenses like car insurance, utilities, or Amazon prime, it’s worth asking, why
do they provide health care at all? Well to understand the history of employer
based healthcare we have to understand what medicine was like about 100 years ago. Spoiler Alert: it was messed up. Before the 20th century most people couldn’t
afford a doctor and that might have been a good thing. Doctors were doing all sorts of kooky procedures
like inserting goat glands into patients’ bodies Or displaying premature babies in incubators
at Coney Island freak shows. Plus people usually went to the hospital to
die rather than get better. So most Americans didn’t really worry about
health insurance. Fast forward to the early 20th century and
medicine is actually getting good. There’s vaccinations, antibiotics, and better
training in medical schools so doctors weren’t just hacking people up. Now people actually want to go to the doctor. Only problem (as always) is that real treatment
costs real money. But even as late as the 1920s most hospitals
still had lots of empty beds, because in spite of improved outcomes for patients, people
couldn’t pay. What was the solution? Makeup. Okay, stay with me. An official at Baylor University hospital
noticed Americans were paying more on average for cosmetics than healthcare. That gave him a major light bulb moment when
he said: “We spend a dollar or so at a time for cosmetics
and do not notice the high cost…yet it would take about 20 years to set aside [money for]
a large hospital bill.” This was a big development because then Baylor
started selling plans to Dallas public school teachers at work. The teachers started paying for health insurance
the same way people pay for makeup: in small increments. The plans became really popular and Blue Cross
was born. As a result health insurance started making
headway in America. But this brings us to our next question, why
did the employer based system became so widespread in the US? It’s odd because by 1920, 16 European nations
had adopted some kind of national, compulsory healthcare. Why didn’t the US
follow suit? Well, because the more things change the more
they stay the same. In 1933 Franklin Delano Roosevelt and the
Democrats pushed for a national health care system as part of his social security legislation. But Republicans, with the help of the American
Medical Association, were able to shoot it down by calling it “socialism” and arguing that a health care program was “government overreach.” Basically, if your grandparents and great
grandparents had facebook, they would have had the exact same arguments as you. Okay. But in order to understand how employers got
involved in the health insurance game we have to dive into two of history’s most exciting
subjects: WW2 and tax breaks. Now, while Hollywood mainly makes movies about
the battles, running a war is actually very difficult and logistically complex. And during World War II, the federal government
was fighting Nazis and their own fear of post-war inflation. And rightfully so. The administration saw what happened when
hyperinflation wreaked havoc on the German economy after World War I. So they were determined to hold it at bay
through wage and price controls. This of course, did not make workers very
happy. In reaction to the wage controls, many labor
groups threatened to strike, which could have been devastating to, ya know, winning the
war. So in a concession to unions, the War Labor
Board exempted employer-paid health benefits from wage controls and income tax. Plus, the government offered big tax breaks
for providing coverage. As a result employers started offering health
plans to attract new employees, unions didn’t strike and by the end of the war, health coverage
had tripled (source) So because history loves irony and unintended
consequences, it was FDR and Labor Unions who played a big part in generating the modern
employer based healthcare system. But what does Communism have to do with this? Well post world war II, employer based health
insurance, wasn’t guaranteed. President Truman pushed hard for a nationalized
health care system, but was defeated by Republicans with a big assist from Communism! But first, a quick post war recap. In Great Britain, devastations from bombings
during WW2 led to a post war political consensus and the formation of the National Health Service. The fact that average citizens were hurt during
the bombings in the UK, played a big role in pushing this agenda forward. In the US, this wasn’t the case. Other than the attack on Pearl Harbor, American
soil remained almost entirely unscathed and most non-Veterans were physically okay. So rather than dealing with a devastated populace,
American politicians were trying to bring war time taxes under control and size up it’s
next enemy: Communist Russia. In 1945, when Truman proposed his 5 points
(source) for better national health, including national health insurance, the threat of communism
was used to defeat it. Remember the American Medical Association? Yeah it still wasn’t too keen on universal
healthcare. The AMA used the “red scare” to convince
the public and congress that Truman’s plan was “socialized medicine”. They called the administration “followers
of the Moscow party line”, which, despite sounding like a line dance, was actually a
pretty strong condemnation of Truman. Of course Truman didn’t appreciate being
called a communist and used the “Christian Values” argument against the AMA saying:
“I put it to you, it is un-American to visit the sick, aid the afflicted or comfort the
dying? I thought that was simple Christianity.” But ultimately, Truman’s efforts for universal
healthcare failed. After that defeat, the Korean War took
hold, and the 1950’s boom economy lead to greater employer based health insurance and
America got more set in it’s healthcare system So what do we get when we add this all up? Well, things that we rationalize as normal
often need a lot of historical turns to arrive at that same point. Without a combination of creative marketing,
the complex economic regulations of WW2, and a post war boom economy mixed with the the
threat of communism American health insurance could have ended up in a very different place. Oh and, remember that thing about displaying
premature babies in incubators at Coney Island freak shows. Yeah, that one actually worked and paved the
way for neonatal health care. History’s a weird place. So what do you think? Have any thoughts about the early history
of American healthcare? Have any evidence about something we may have
missed? Let us know down in the comments and we’ll
see you next week. Last week we talked about the origin of Killer
Clowns. Let’s see what you had to say Several people asked, why we decided to start
with medieval jesters rather than starting further back? That’s a really great question In history, the point that you start at is just as important as the set of questions you ask. For example, in Columbus’ narrative, we usually start with 1492. As opposed to say the day Queen Isabella became the queen of Spain or the day Columbus was born. Becasue we’ve decided that that might be the best point to start for the argument we’re making. But if you have another starting point that goes further back to think about to say early mythology and trickster characters or other European histories of clowns, drop them in the comments and let’s talk about it. Paul Hallinan Miller, an actual clown, posted a really cool TedX talk he did about how clowns subvert authority. Which is cool, cause I’m not a clown in
that sense. So we’ll link it down in the description. A couple people asked about where the idea
of the Sad Clown has come from ? Ronald Poe the 4th came in with a great answer
on Facebook, that Smokey Robinson wrote “The Tears of a Clown” based on an 1892 Italian
play about a clown named Pagliaccci , who performed happy, but was sad and cried in private. Oddly enough for our episode, Pagliacci also
actually murdered his wife during a performance. Good lord, clowns are creepy. So thankfully for all of you who are terrified of clowns, that’s enough on that subject and we’ll see you next week.

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