Back to the Future

“By joining a lodge, an initiate adopted, at least implicitly, a set of values. Societies dedicated themselves to the advancement of mutualism, self-reliance, business training, thrift, leadership skills, self-government, self-control, and good moral character. These values reflected a fraternal consensus that cut across such seemingly intractable divisions as race, gender, and income”.

– From Mutual Aid to the Welfare State

In the 1985 film “Back to the Future”, Marty McFly, an aspiring rock star, nearly alters his history when he accidentally returns to the past in a time-traveling scheme gone bad.  As the film revealed, to go back to the future is to revisit events from the past to alter the course of history for the present. 

In David Beito’s 2000 book, “From Mutual Aid to the Welfare State”, historian Beito revisits the fraternal societies of the nineteenth and twentieth centuries that provided social welfare benefits to the poor and working class through grassroots initiatives.  Built on reciprocity rather than charity, membership was more than just benefits, but a lesson in thrift and individual responsibility.  At a time when Americans were highly cooperative, to belong to a lodge was akin to good credit. 

Indeed, mutual aid societies and fraternal orders allowed ordinary people to cooperate and act collectively for mutual help and benefits at low costs.  While benefits primarily included funeral costs, sick pay, healthcare, and life insurance, additional aid, once fraternal orders expanded nationally, occasionally included income for unemployment, retirement, education, as well as facilities for orphans and the elderly.  Benefits in the 1800s were small and administered locally, but expanded after organizations went national with multiple lodges doling out substantially better benefits for sickness and death.  By the early 1900s, only churches had more members than fraternal societies. 

Rather than welfare and charity, fraternalism was seen as a way for poor and working-class people to provide otherwise unaffordable protection for sickness and death.   Membership, in fact, gave one the right to assistance, preserving an independence and self-reliant means of coverage.  Developed spontaneously to address societal issues, community-based membership was rooted not just in benefits but also in deep loyalty based on either religious, ethnic, or ideological ties. Even minorities, women, and immigrants were disproportionately served by mutual aid programs.  As such, mutual aid societies dominated the low-cost health and life insurance markets. For instance, by 1895, half of the value of life insurance was provided through these voluntary societies. 

To avoid the stigma associated with charity and government assistance, many of whom received subsidies from state and local governments, high rates of membership for families with wages under the poverty level were able to avoid the shame.  Not wishing to be dependent on anyone or anything, fraternal orders kept many of the impoverished from the poor house at a time when pauperism was to be avoided at all costs.  Welfare elicited a sense of loyalty to the state and changed the character of the people.  Since membership was decidedly based on worthiness, malingering was managed to keep costs down and people accountable. 

Believing that charity began at home, even the poor and working class were incentivized to purchase low-cost mutual aid to cover their risk of losing work from sickness, as well as covering their funeral expenses.  In the hierarchy of care, self-help began with the nuclear family, then extended to kinships, and finally to mutual aid organizations.   Yet, it would be the government and a growing call for public assistance that would crowd out the need for self-reliance, ending an era of mutual aid organizations.  Charity, rather than shameful, became altruistic, something to be proud of. 

Doctors also contributed to the undoing of mutual aid healthcare.  Lodge practices initially paid a physician to look after the needs of a lodge on a contract basis, charging roughly 2 dollars per year per member, equivalent to a day's wage at the time.  This is how the poor received their basic primary care services.  Eventually, doctors organized in opposition, believing they could get higher fees on a fee-for-service basis.  Soon, employer-based group insurance with third-party payment systems, and ultimately subsidized Medicare and Medicaid, would drive out lodge practice. 

A plethora of government programs emanating from the New Deal, and later Social Security, all but ate up any need for self-help, delivering instead a steady stream of paternalistic dependency.  Then, by enacting state laws, organized medicine accelerated the demise of fraternal orders, destroying low-cost alternatives for the poor and working classes.    

Just as McFly returned to the past to improve the future, we too should return to the past to revisit an anti-paternalistic time when self-reliance was admired.  Like churches, mutual aid societies were formed to meet the needs of the people in a way that wouldn’t change the character of the people, allowing citizens to solve their own problems.