Probe International

Before the welfare state existed, working-class Americans built their own safety nets, and those nets caught people. Fraternal mutual aid societies like the Odd Fellows, the Sons of Italy, and hundreds of smaller ethnic lodges ran insurance programs throughout the 19th and early 20th centuries. By 1920, roughly one in three adult American males belonged to one. Members paid modest dues, typically $1 to $2 monthly in 1900 dollars, and received sickness benefits, death payments, and access to lodge doctors who charged $1 to $2 per year per family. The Foresters of America covered 900,000 members by 1908. These institutions ran on mutual contracts between people who knew each other; it wasn't charity. Accountability created alignment of incentives. Lodge members had every incentive to verify that sick claims were genuine, because fraudulent payouts drained their own pool. Government bureaucrats face no such incentive. Someone else bears the cost of fraud in their system. The lodge doctor system collapsed because the American Medical Association lobbied state legislatures throughout the 1910s and 1920s to ban contract medicine. Doctors working for lodges earned less than AMA members preferred. The state obliged, eliminated the competition, and left citizens with the fee-for-service monopoly that still strips your paycheck today. Voluntary cooperation built welfare that worked. Politicians dismantled it.