, Heritage writer
The factory’s got a good medical plan
And, cousin, I’m a union man.
-Warren Zevon, “The Factory,” 1987
For more than 60 years, millions of Americans have gotten health care insurance through their work. Despite employment changes in the American economy, that sort of coverage is still enjoyed by more than half of the non-elderly population. But it wasn’t always that way. The hard work of organized labor was instrumental in making employer-sponsored health coverage a cornerstone of the human services safety net.
Henry J. Kaiser’s workers at the Grand Coulee Dam (1938-1941) enjoyed a well-run prepaid health plan as part of the job, and after the unions insisted, their families were able to join. The same benefits later applied to Kaiser’s 190,000 defense workers during World War II.
But this was an anomaly. Most American workers had nothing remotely close to a nonindustrial health care plan, even in the booming years after the war. That would change in 1948 and 1949 with two key labor law rulings, W. W. Cross & Company, Inc. v. United Steelworkers of America, CIO and Inland Steel Co. v. National Labor Relations Board, which established a precedent for union contracts regarding hospital and surgical benefits for employees and their dependents.
The first case involved the union at Pacific Coast Steel Co., Local 1069, in the San Francisco Bay Area, which selected the Permanente Health Plan (now called Kaiser Permanente) for its members and requested that employers provide payroll deductions for health care. Bethlehem Steel Company (which acquired Pacific Coast Steel in 1930) disputed their right to make such a decision. The union brought the issue to court, and won.
With the Inland Steel case, trial examiners from the National Labor Relations Board ruled that the employers were guilty of unfair labor practices in not consulting the Steelworkers Union when they put insurance and pension plans into effect. The examiners in both cases directed the companies to bargain with the union on the type and extent of these plans.
Inland Steel appealed, but on September 23, 1948, a higher court affirmed the NLRB position and ordered Inland Steel to bargain with the CIO union concerning retirement pension plans. This ruling applied to all unionized companies engaged in interstate commerce.
The door to employer-sponsored health care plans had been opened, and hundreds of thousands of working people benefitted. This was a major step forward in building public expectations that medical care be affordable and accessible. The two rulings fundamentally shifted organized labor’s role in defending and expanding workers’ rights.
In a key example of the ruling’s impact, the International Longshore and Warehouse Union approached the Permanente Health Plan in 1949 about covering their membership. Permanente was attractive to the ILWU for its racially integrated facilities and labor-friendly record during the war. The January 6, 1950, ILWU newspaper The Dispatcher announced the new health plan, and by year’s end, 90 percent of eligible members had signed up.
Thank you, organized labor — you not only brought the weekend to our regular work week, you brought us the employer-sponsored health plan. And on this particular Labor Day weekend, let’s remember and honor the gains made by unions.
Special thanks to ILWU archivist Robin Walker, who has put their newspapers from 1932 to present online.
A longer version of this article appears in The Stansbury Forum.
Short link to this article: http://k-p.li/2xyBU5r
, Heritage writer
Part 1 of 2
Health care was a hot-button topic in the years after World War II. And two of the biggest targets were the then Permanente Health Plan (now called Kaiser Permanente) and Group Health Cooperative of Puget Sound.
Henry J. Kaiser and Sidney Garfield, MD, had paired up to provide health care for Kaiser’s 190,000 West Coast home front workers in 1942, and the plan opened to the public in 1945. Group Health began in 1947 and, as of 2017, is now part of Kaiser Permanente. Both were models of care, featuring the common-sense principles of prepayment, prevention, and group practice.
The traditional private practice fee-for-service medical establishment wasn’t too keen on competition, especially when it became clear that these new affordable plans were popular. Professional groups such as local medical societies and the American Medical Association, tried to shut down these upstarts. Physicians were frequently shunned and denied access to practice in local hospitals.
Kaiser Permanente medical economist Avram Yedidia recalled that in San Francisco in 1948, when about 1,000 city employee family members joined the plan, the Permanente Foundation had to rent a building at 515 Market Street and purchased a small hospital because “…we couldn’t get hospital privileges for our doctors in any San Francisco hospital.” Yedidia further explained:
“One of the major obstacles that programs such as ours faced at that time was the unavailability of hospital privileges for their physicians. This remained a national problem for years to come. One of the most effective tools for stifling the growth of group practice prepayment plans was to withhold hospital privileges from physicians associated with them.”
Until 1954, San Diego County Medical Society bylaws stated that physicians engaged in prepay medical practice were unethical and therefore were ineligible for membership, and hospital bylaws required physicians be members of the county medical society to secure privileges to hospitalize patients. In Oregon, Kaiser Permanente lawyer Robert Ridgely described having to threaten an antitrust lawsuit against the Marion County Medical Society for conspiring to refuse privileges to the Permanente doctors. And Scott Fleming, Senior Vice President of the Kaiser Permanente Central Office, noted in an oral history that as late as 1969, when Kaiser Permanente expanded to Colorado, physicians were only allowed to use two of the four hospitals in Denver.
It was ironic that Henry J. Kaiser, a fervent anti-communist and one of America’s preeminent capitalist industrialists, found himself defending his health plan from charges that it was “socialistic.” He genuinely believed that his plan was simply the best.
Fending off legal challenges
For Permanente, things came to a head in October 1947 with a legal battle started by the Alameda-Contra Costa Medical Society. After a two-day hearing the California Board of Medical Examiners found Dr. Garfield, at the time the sole proprietor of the medical group, guilty of “employing unlicensed physicians and unregistered interns.” The Board placed Dr. Garfield on probation for five years and suspended his license for one year, but withheld the suspension provided he abided by state law.
Five of the six charges against Dr. Garfield involved hiring doctors at the Oakland Permanente hospital who were not licensed to practice in California. The sixth charged him with keeping a doctor on the staff until 1946, although his license had been revoked in 1943. The charge of not registering interns arose when Garfield explained that the five doctors were undergoing training.
Dr. Garfield defended his actions, saying “The procedure which we followed over a period of years in our training program was the same as that followed in other teaching institutions in this state, such as Stanford University and the University of California.” Of the approved hospitals in the state, only Permanente has been singled out and charged with technical violations, Dr. Garfield added.
Dr. Garfield appealed the decision. At the same time, one of the targeted physicians, Clifford Keene, MD, was issued his license after a two-day grilling by the Board of Medical Examiners and departed to run the employee medical program at Kaiser’s Willow Run, Mich., automobile plant.
Dr. Garfield’s case was eventually dropped, and his right to practice restored in 1948, but the blows had landed.
Part 2, where we learn more about the response by the Permanente Health Plan and the similar experiences of Group Health Cooperative.
Short link to this article: http://k-p.li/2vd5Oi5
, Heritage writer
This post introduces a podcast, our new channel for sharing Kaiser Permanente history. Given the rich set of audio materials in our archives, it makes sense to let viewers hear our stories as told by those who were part of it. With these podcasts we will explore audio sources including World War II shipyard launchings, speeches by key figures, and interviews.
So, without further ado, let’s hear our founding physician talk about what he learned about building a medical plan, starting in 1933.
Podcast fulltext for “Dr. Sidney Garfield on Medical Care as a Right”
Hello, I’m Lincoln Cushing. Welcome to Kaiser Permanente’s “Earful of History”
Today we’ll hear from our founding physician, Doctor Sidney Garfield. He had some interesting things to say about medical care as a right – and also about the origin of what we now call Permanente medicine.
Dr. Garfield’s talk comes to us from a 1972 lecture he delivered to community medicine students at the University of Southern California Medical School.
Let’s go way back to the Great Depression, when America’s industries were in shambles, people were out of work, and things were really tough.
In 1933, Dr. Garfield was fresh out of medical school, and he’d set up a small practice in Southern California’s remote Mojave Desert. He was providing industrial medical care for the workers on the Colorado River Aqueduct project.
I soon found myself in rather serious financial difficulty. Knowing nothing about medical economics, I had tackled the impossible job in those days of trying to take care of a group of workers with none of the usual crutches. There were no rich to pay for the poor. No subsidy. No philanthropy. There wasn’t even a county hospital to which we could send our charity cases.
Dr. Garfield’s problem was the standard business model of industrial medicine where he got insurance reimbursement for treatment after a worker was sick or injured. So he worked out a new deal with the insurance carrier. Dr. Garfield was prepaid a fixed amount per worker, and in turn he guaranteed he’d provide their needed medical care while on the job. This was a win-win solution. It assured Dr. Garfield a steady income to run his clinic, but more importantly, it gave him the incentive to keep the workers healthy instead of making money when they got injured.
The aqueduct project ended in 1938. He was going to go into private practice, but history intervened. Dr. Garfield went up to care for the workers at industrialist Henry J. Kaiser’s huge dam project on the Columbia River in Washington. Grand Coulee Dam, the largest concrete structure ever built.
[Woody Guthrie sings; he was hired by the Bonneville Power Administration to promote the wonders of the new dam].
Dr. Garfield, reluctant at first, became excited at the prospect of fixing up the decrepit local hospital and bringing in a top-notch staff. There, he learned a lesson – a prepaid health plan for whole families can be effective and affordable.
In the beginning, we took care of the workers with the health plan. And we took care of the families on fee-for-service.
And we soon found out that it didn’t work at all. It was too painful of a situation. The workers could get their care so easily through their health plan. And they had such problems paying for the care for their wives and children. It bothered not only the workers, it bothered the employer. It bothered the unions. It bothered our physicians. And so pretty soon we were being pressured on all sides to start a family plan… fifty-cents a week for the wife, and twenty-five cents a week for each child. [We] started a family plan.
And that worked beautifully too. From then on we had no concern. No problems taking care of the women and the children. But that rounding out of our employee plan to a complete family plan was Coulee’s contribution – greatest contribution to our lessons in medical care.
Bear in mind that until this point in history, health insurance plans didn’t really exist. If you got sick, you hoped you had enough money to pay a doctor, and you often delayed that until things got really bad.
Prior to the family plan, walking through the corridors of our Coulee Dam hospital, you would see a fair amount of very sick women and children. Terminal pneumonia. Ruptured appendices. Diphtheria cases and so forth. After the plan had been in operation for several months, that picture changed. The level of illness of these people changed. Walking through the corridors now you would see simple appendices, and early pneumonias. And diphtheria disappeared completely with the immunizations we offered with our health plan. The barrier of cost being removed, these people were coming in earlier for care. We were able to treat them earlier and prevent them from getting complications. And I’m sure preventing many of them from dying. That was a lesson that we’ve never forgotten.
This was the origin of what we now call Permanente medicine. Speaking to the roomful of community medicine students, he reflected on the important medical model he’d developed through his association with Henry J. Kaiser and the efficiencies of the Kaiser Permanente Health Plan:
In conclusion, in view of our commitment to medical care as a right in this country, this is – comprehensive health services, of high quality, to every person, the importance of this research and potential benefits is self-evident. We can never achieve the goal of medical care as a right without a delivery system that matches the demand of that right.
This new delivery system [I just described] does just that. It provides increased capacity, increased accessibility, appropriateness of service, comprehensiveness of care, continuity of both health care and sick care, efficiency of resource utilization, and is cost-effective. Its new services are relatively easily staffed, and it promises ready transferability and adaptability to most all forms of practice and geographical areas.
It’s impressive that an industrial health plan from the Great Depression would evolve into a robust and effective model of health care for all Americans.
It’s a testament to the persistence of mission and the dedication of thousands of physicians, staff, and administrators, starting with Dr. Garfield.
Thanks for joining us in this Kaiser Permanente Earful of History.
This audio is from a 1972 lecture Dr. Garfield delivered to Community Medicine students at the USC Medical School, recorded by Dr. Robert Tranquada and donated to Kaiser Permanente Heritage Resources.
Podcast producer: Juan Aguilar.
Short link to this page: http://k-p.li/2wb8axr
, Heritage writer
The third annual Home Front Festival and Rosie Rally was held in Richmond, Calif., on Saturday, August 12. The event honored those who contributed to the World War II home front, especially the women who stepped up – as they always do.
The highlight is always the contest for number of people dressed as Rosie. This year’s certified attendance of 2,229 didn’t top our own Guinness-record-setting count of last year, but we kept our lead over our counterparts at the Willow Run plant in Michigan. Whew.
Thank you, Rosie the Riveter Trust, staff at the National Park visitor center, and all the women who showed up. It was truly inspiring.
Short link to this article: http://k-p.li/2i1GmGm
, Heritage writer
“Tomorrow’s Health Plan – Today!”
That was the title of Paul de Kruif’s seminal article in The Reader’s Digest (also called simply Reader’s Digest) May 1943 edition. The bright red subhead proclaimed “Henry Kaiser and California physicians are proving that ‘good medicine’ can he brought within reach of all.”
Reader’s Digest was founded in 1922 by DeWitt Wallace, and its distinct format of condensed and rewritten material from a wide range of publications became very successful; it is currently the largest paid circulation magazine in the world.
This was the first national article on the industrial health care plan organized by Sidney Garfield, MD, for the 190,000 workers at Henry J. Kaiser’s six West Coast shipyards and his steel mill in Fontana, Calif. The plan was still new – it had only been started just over a year earlier, in March 1942 – but already it was making waves. That same year de Kruif devoted an entire book to the Kaiser health plan, Kaiser Wakes the Doctors, where he coined the description of the plan as the “Mayo Clinic for the common man.”
De Kruif (1890-1971) was quite a character. Born in the Netherlands, he moved to the United States and received a degree in microbiology. But his passion was policy change, not medical research. He published Our Medicine Men in 1922, followed by The Microbe Hunters in 1926. He spoke and wrote passionately about health care reform, railing against the limitations of private practice and fee-for-service. The Associated Press quoted him in 1939 as saying, “The essential principles of the proposed health law articulated by Mr. de Kruif would call for the establishment of adequate medical care as the ‘fifth human right,’ taking its place alongside the rights to food, shelter, clothing, and fuel.”
Initially a proponent of socialized medicine, by the early 1940s de Kruif came to favor the alternative model practiced by Henry J. Kaiser and Dr. Garfield. His four-page article in Reader’s Digest glowed about the efficiencies of the health care offered to the Kaiser shipyard workers:
All medical and surgical care is centralized under one roof. That’s the reason for both its effectiveness and its economy. The doctors are all handy to the laboratories, X-ray, surgeries and to each other.
Reviewing the Permanente Health Plan (now called Kaiser Permanente) at the early stage that he did, he noted that it did not include workers’ families. Although Kaiser and Garfield had developed and run a successful prepaid family plan a few years earlier at Grand Coulee Dam, the incredible pace of expansion in the shipyards after the Japanese attack on Pearl Harbor made it impossible to cover nonindustrial care for employees (a hugely popular option offered starting August 22, 1942) for anyone but employees. De Kruif noted that this gap was taken up by the California Physicians Service.
Created in 1939, the CPS (later called Blue Shield of California) was run by the California Medical Association and became the state’s first statewide prepaid plan. By mid-1943 shipyard families were admitted into the Permanente Health Plan, and the relations between private practice physicians and those working for Dr. Garfield begin to fray. The hostility of the medical establishment accelerated as the war ended and the Permanente Health Plan was opened to the public.
De Kruif’s opening salvo touting the benefits of the Permanente Health Plan was the first in Reader’s Digest, but certainly not the last. Permanente physicians continue to be quoted in their articles – just this year we saw “15 Ingredients Medical Doctors Always Add to Their Meals,” “Stomach Hurt? 12 Things Your Stomach Is Trying to Tell You,” and “13 White Foods that Are Way Healthier Than You Thought.”
Short link to this article: http://k-p.li/2wMhZ1U