How Group Health Medical Plans Spread in the United States

Organized labor quickly realized the value of group health medical plans. Passage of the Wagner Act provided unions with the organizing tools necessary to expand their influence. In the 1948 case of Inland Steel v. NLRB (National Labor Relations Board), the court interpreted the right to bargain for working conditions, protected under the Wagner Act, to include the right to bargain for retirement benefits. In the 1949 case of W. W. Cross and Co. v. NLRB, the court came to the same conclusion for health insurance. These decisions along with the passage of LMRA (Labor-Management Relations Act), also known as the Taft-Hartley Act of 1974, fueled the spread of group health medical plans during the late 1970s.

As organized labor grew in influence, so did the offering of group medical plans. These benefits became the mainstay compensation components of union contracts and would slowly emerge as part of nonunion compensation as well. Not only were the union members afforded benefits, but the management group at companies where unions negotiated were extended the same benefits as the bargaining units, significantly increasing the span of influence of organized labor beyond their direct membership.

For nonunion employers, offering employee benefits became a preemptive strategy to prevent a union from gaining a toehold by promising employees benefits. In addition, employers found that offering group medical plans helped attract new hires, retain existing employees, and improve productivity and morale. This type of strategy helped drive the spread of group health medical benefits.

While group medical benefits were the starting point, many other types of benefits, such as dental, vision, hearing, etc. were gradually provided through collective bargaining and then extended to the nonorganized group of employees as well.