Dear Friends,
One of the most important things we do at the Artists Health Insurance Resource Center is help people who are losing job-based or union-based health insurance find affordable ways to cover themselves and their families.
But when you stop to think about it…why is it that having health insurance is based on having a job? Why in the world would an employer–any employer, be it Wal-Mart or Warner Brothers–want to be in the health insurance business? Wal-Mart sells groceries and home goods; Warner Brothers makes movies. Their businesses have absolutely nothing to do with health care. And yet, year after year, they commit significant capital and human resources to designing, managing and operating health plans for their workers.
In most developed economies (Germany, the UK, Canada) and even some emerging economies (India, Mexico, Ghana), this isn’t how the system works. In those nations, access to health care is based on citizenship, not employment.
So why is it that in the US, we get our health insurance through our jobs?
The answer is 80 years old.
During the Second World War, millions of Americans–mostly American men–who otherwise would have been working on farms, in factories or in offices, were serving in the military, which resulted in a severe shortage of available labor on the home front. This put a significant upward pressure on wages: with the supply of labor low and the demand for workers high, a real fear emerged that wages (and consequently inflation) would skyrocket.
To counter this, Congress passed, and President Franklin Roosevelt signed, The Stabilization Act of 1942: a law that froze wages (and prices) beginning in September of that year. And while the law succeeded in stemming wage growth and tamping down inflation, it left workers with a peculiar dilemma. Because no matter how long or how hard you worked, the law effectively prevented you from ever getting a raise. Your salary on September 15, 1942 was going to be your salary for the foreseeable future.
Left with this dilemma, workers–in particular union workers–lobbied Congress to allow them to negotiate for things other than wages in their contract negotiations: things like pensions and health insurance. Other laws followed and supported this position. The Revenue Act of 1942 set corporate tax rates at 80% or more on profits in excess of prewar revenue, but it also allowed companies to deduct employee benefits from those profits, encouraging them to offer generous benefits to their employees rather than pay taxes to the government. In 1943, the National War Labor Board officially exempted fringe benefits from the wage freeze, firmly ensconcing perks like health insurance and retirement plans in the American workplace.
Thus, in a victory of sorts, people who were employed got health insurance. But this left serious gaps in coverage across huge swaths of the country because millions of Americans weren’t employed. Which leaves us today with a patchwork system of health insurance, anchored by employer-based coverage, but barnacled with programs for people who are unemployed or unemployable like Medicare (for the retired), Medicaid (for the poor) and CHIP, the Child Health Insurance Program (for the young), which all cluster around job-based insurance.
The system is far from ideal. But as we all–here at The Actors Fund and around the country–wrestle with the gargantuan maze of healthcare and advocate to reform it, it’s wise to remind ourselves how we got here.
Yours in good health,
Jim Bracchitta
Do you work in performing arts and entertainment and have questions about health insurance? The Actors Fund provides assistance nationally. Contact our regional office closest to you to speak to a counselor.
New York City
917.281.5975
Los Angeles
855.491.3357
Don’t forget to use the resources section of our website. It contains tools to help you make decisions about your health insurance, including new online tutorials on how to choose providers and how to read an Explanation of Benefits. In addition, you’ll find an updated Stage Managers National Health Directory, our national online directory of health care providers recommended by industry professionals that can be used by theaters and touring companies. For these resources and more, visit actorsfund.org/HealthServices. You can also find out more about enrollment assistance and upcoming health insurance seminars near you!