How labor paved way for employer-sponsored health care.
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 2 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 2 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% 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.
A longer version of this article appears in The Stansbury Forum.