Sunday, October 08, 2006

World War II created health insurance perk

Tuesday, September 26, 2006
World War II created health insurance perk
Ron French / The Detroit News

The fact that GM pays anything for health care is an accident of history.

By the 1940s, health care costs in most industrialized nations were paid by the government.

That might have happened in the United States, too, if not for World War II.

To halt inflation during the war, the government put a cap on wage raises. To compensate workers, companies began offering health insurance.

By the time the cap on raises was lifted, health insurance had become a common perk to attract and retain workers.

In 1950, GM President Charles Wilson offered to pay 50 percent of the health care costs of his employees. Walter Reuther, national president of the United Auto Workers, initially resisted, believing the cost should be spread across many companies or across the nation, according to a biography of the union organizer.

Reuther gave in, and GM entered the health care business.

In 1961, retirees were included. Three years later, the company began paying 100 percent of health care bills for workers and retirees.

Today, the United States is the only industrialized country in which most health care is paid for by employers.

Ron French

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