Health Insurance a Most Vital Need

New York Sun/May 28, 1916

Felix M. Warburg Says America Must Take It Up if We Are to Compete Successfully in World Markets

“HEALTH Insurance legislation will be introduced here very shortly if America as a progressive democracy is going to compete successfully in the world’s markets and at the same time conserve the stamina of her workers.” This opinion was expressed by Felix M. Warburg of the banking house of Kuhn, Loeb & Co., brother of Paul M. Warburg of the Federal Reserve Board. He was referring especially to the health insurance bill brought out by the American Association for Labor Legislation this year. Mr. Warburg explains his interest in health insurance by his first-hand acquaintance with its working in Germany. “I lived in Germany at the time the law for health insurance was passed and put into operation and the effect from what I have seen and from what have been told has been excellent,” he said. “It is only by means of a system of universal health insurance that the service of advanced medical science can be brought to the care of the workers as a whole, while at the same time the payment of joint contributions brings economic pressure to bear on the State, the employers and the worker himself to prevent disease. In other words, under health insurance all parties concerned are made to feel cash value of good health.” “Does not the German workingman reject the levying of contributions on his wages?” Mr. Warburg was asked. “I have not heard that the German workman resents this small tax on his wages,” said Mr. Warburg. “It would hardly be reasonable if he did, since the insurance system divides between himself and his employer a charge which he previously had to bear alone.

“Moreover, as one labor leader pointed out, insurance has sprung from the workers themselves and the more thrifty were already buying their own policies before the insurance laws were passed. Another labor leader, I remember, said that the deductions from wages were ‘self-evident.’ “Many men,’ he added, ‘go far beyond the statutory minimum and buy additional benefits for themselves.

“The sums of money accumulated in the sick funds are largely under the control of the workers themselves and with them they have built hospitals and sanitaria, made loans and even undertaken extensive housing schemes to get better homes for themselves.

“I have heard thoughtless talk to the effect that health insurance destroys the initiative of the workers. In my experience, and to the best of my belief, it has the contrary effect, giving in point of fact the greatest incentive to cooperation and self help.

“Through the activities of the sick funds large numbers of private citizens are brought into public life and service. When ill the workers no longer have to beg at the doors of hospitals for admission. The hospitals make special terms with the funds which pay for institutional treatment of their members. One consequence of this is that the hospitals, feeling some assurance as to income, are able to get the most modern and scientific equipment.”

“Will not the expense incurred by the system retard the growth of industry in New York?” Mr. Warburg was asked.

He countered this query by asking if it had retarded the growth of  German industry or driven trade from the country.

“Remember,” he said, “that this legislation dates from 1883 in Germany and the Germans have had a whole generation in which to feel the effects and to be put out of business by insurance if it was going to produce that result. As everyone knows, it is during this last generation that German trade and industry and scientific advance have gone forward by leaps and bounds.

“Even England, her great trade rival, recognized this, and a few years ago followed her in adopting the most sweeping insurance measure yet carried. It was with this system in operation that Germany attained her reputation as a leader in efficiency and science, an attainment which we all admire, whatever we may think of her foreign policies. It is worth noting, too, that no country which has tried health insurance has given it up.”

“You think, then, that employers have no real ground for complaining that health insurance would throw a burden on them?”

“It is just as reasonable to argue that the introduction of improved machinery is a burden to employers. Health insurance only distributes on a scientific and regular basis a heavy cost which society is already paying in a haphazard and irregular way. The better employers today pay part of the costs of sickness through different kinds of welfare work, while all employers are bearing the burden, though perhaps they do not recognize it, in the preventable lack of health and consequent lack of efficiency of their workers.”

“Why is it not desirable to rely on private initiative to provide health insurance in the United States?”

“Private insurance never has and never can reach those who most need it. Every insurance agent knows that those who are living on the narrowest margin are the last to afford policies. Moreover it is uneconomical in that it does not distribute risks widely enough. By distributing these risks over all they are so light as scarcely to be felt.

“In trades where workers have an average of good health it is estimated by leading actuaries that at a total which pay for institutional treatment of their numbers, at a total cost of 3 percent of wages, which will be paid jointly by employers, employees and the State, medical, surgical and nursing care and appliances, a sick benefit of two-thirds of the wages for twenty-six weeks in any one year and a small funeral benefit can be provided.

“I would like to add, though, that the advocates of health insurance in this country are undoubtedly wise in placing special emphasis on the preventive campaigns which follow the adoption of health insurance. Insurance gives the needed stimulus to wide and thorough health campaigns.

“To refer to the case of Germany again, the introduction of health insurance has given an enormous stimulus to the whole public health system from the Imperial Board of Health down to the small local committee which takes charge of public health and sanitation in all communes of less than 5,000 population. A complete network in expert health and sanitation service has been established. The result is undoubtedly seen in the extraordinary efficiency of Germany under the stress of war.”

Mr. Warburg then called attention to a statement made by James O’Donnell Bennett, the war correspondent now with German armies on the eastern front.

“Though many of the men are 50 years old,” writes Bennett, “they are as sound as the lads, and many officers credit the amazing health of the soldiers who are far beyond middle age not only to the scrupulous sanitation in the war zone but also to the fact that for a generation the humblest man in Germany could through the German system of health insurance obtain medicines and the advice of excellent doctors for practically nothing”

“We are, it seems to me,” concluded Mr. Warburg, “almost too modest in America in asking only for health insurance. In motoring through Germany in recent years nothing has been more pleasing than to notice the effects of the similar insurance provision which has been made for old age.

“Where the old people were a burden to the rising generation and had to go to the almshouse, they are now through their pensions, economic assets to their families. The almshouses are empty and the grandparents who formerly used to occupy them can be seen through the countryside in the open air with the children while the parents are at work. Sickness, invalidity and old age are insurable risks, and no more humane measures have been passed than those providing an insurance system to protect the workers against these inevitable contingencies.”

(Source: Library of Congress, Chronicling America,

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