NCPA - National Center for Policy Analysis

Fraternal Societies Provided Medical Care And Welfare

July 10, 2000

Many well-intentioned government programs snuff out voluntary effort. After a time, people think that the only way of attacking a social problem is public spending. Long untried private alternatives are routinely derided as "unworkable" and inferior to the status quo.

In "From Mutual Aid to the Welfare State," David T. Beito, a historian at the University of Alabama, shows how fraternal societies in 19th-century America provided a network of services and institutions resembling virtually every aspect of today's welfare state, including health insurance, hospitals, orphanages and retirement homes. Fraternal societies sustained needy citizens from cradle to grave.

Such associations were first and foremost mutual-aid societies, relying for their effectiveness on dues from their members, spreading risk among the larger group and buying collectively whatever was needed. They were of special importance to blacks and immigrants, helping overcome the disadvantages of racism and the lack of English

Beito's most interesting chapter concerns health care.

  • Long before Americans became accustomed to getting health insurance from their employers or the government, fraternal societies made low-cost health care widely available.
  • Typically, a society would contract with a local doctor for his services, which might cost members as little as $2 a year -- about a day's wages in the late 19th century.
  • Once a year the contract would be put out for competitive bid, which both drove down prices and raised the quality of care.

Doctors preferred to contract with patients one by one, charging them a fee for every service. Eventually, medical societies drove fraternal ones out of the health-care business by deeming such a practice unethical for doctors, who risked expulsion and the denial of hospital privileges if they contracted with fraternal societies.

The high point of private welfare was reached during the 1920s, when almost half of working-class adults belonged to such societies.

Source: Bruce Bartlett (senior fellow, National Center for Policy Analysis), "Those Are Truly Helped Who Help Themselves," Wall Street Journal, July 10, 2000.


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