Mutual-aid in the United States seem to be a forgotten part of history. Before the government created a health care welfare system, churches, communities and charity played a minor role in helping the less fortunate or poor, but mutual-aid or “fraternalism” was the main source of help for the needy. Fraternal societies were clubs or “lodges” of individuals that contributed weekly funds to the group to provide support for members during times of illness, injury and death. In Great Britain these organizations were called friendly societies. The lodges were originally created as form of life insurance for workers through mutual-benefit associations. Each member paid a contribution to a common fund to be used during times of hardship. Death benefits to provide for a funeral were paid out to family members of the deceased worker. Widows and orphans could also receive funds for financial support as well. Eventually fraternal societies began to incorporate sick benefits in addition to death benefits. They served as the first form of health insurance in the United States or welfare before the welfare state. By 1910 one out of every three American men and their families were covered by lodges.

Before the Great Depression fraternal societies flourished and outcompeted commercial insurance. Each society was autonomous and self-governing, which meant they set their own rules. If members exceeded their limit of sick benefits the lodge could fundraise through bake sales, raffles and parties to help. If a member tried to exploit funds by making frivolous claims it could easily be monitored within the organization. This created an incentive for members to be accountable and build solidarity between each other. Fraternal societies often contracted directly with doctors to treat members. One lodge in Pennsylvania called the Forestors of Reading provided care by a doctor (including house calls) for $1 a year while, for $2, the Fraternal Order of Eagles covered everything except obstetrics and treatment for venereal disease. This was also a great way for younger doctors to establish a practice or for older doctors to work part-time by treating a small number of individuals or families for a certain amount of money.

These societies naturally created voluntary association and social order while benefitting many different groups of people, including those affected by Jim Crow Laws. Immigrants, women, Jews and the poor all benefited from lodges. In 1919, the Illinois Health Insurance Commission estimated that 93.5 percent of the African American families in Chicago had at least one member with life insurance. In Philadelphia, African-Americans had a 98% insurance rate through fraternal societies. On the Lower East Side of New York City, 500 doctors had contracts with Jewish lodges. According to Cato Institute researcher David Beito in his book From Mutual Aid to the Welfare State, immigrants from Germany, Russia and modern day Czechoslovakia participated at rates approximately twice as high as native whites. Some examples of fraternal societies made for specifically for women include the Eastern Star for the Masons, Rebekahs for the Odd Fellows, and Ladies of the Maccabees.

As time passed government began to assume more of a role of social welfare, first starting with the American Medical Association (AMA). At the time no licensure or formal education was required to become a physician. University-trained physicians had already organized into state medical societies, which founded the AMA in 1847. Its goal was to ensure a minimum level of quality education and practice by creating higher admission and graduation standards through government lobbying. In 1904 the AMA created the Council on Medical Education (CME) whose purpose was to reform medical schools. In 1910 the CME asked the Carnegie Foundation to publish a survey of all medical schools in the United States called the Flexner Report. The report concluded that many of the 155 schools surveyed were substandard and that freestanding institutions were inferior to university-based institutions. The result was a decline in the number of medical schools by approximately half. Sanctions by the AMA colluding with government threatened many doctors with being stripped of their licenses if they practiced medicine with lodges. Commercial insurance became tax deductible whereas lodges were not. By the end of WWII mutual-aid societies were rapidly declining.

Today fraternal societies are nearly extinct and the only way to obtain health care benefits is through commercial insurance or directly from the government. Modern health insurance has become so politicized that it might as well be government-run insurance. However, the concept of mutual benefit still occurs on a marginal level and may become more of a trend as young people and the middle class become desperate to find affordable health care. Social media has given rise, which serves as a platform for various fund raising purposes. Payment of medical bills is one utilization of this crowdfunding website. Lengthy stays at the hospital for treatment of cancer or serious injuries can leave people with years of debt as well as loss of coverage from insurance companies. GoFundMe allows a person in this situation to reduce their financial burden through donations from peers on social media. Another website called works in a very similar way to fraternal societies. It is not an insurance company but a medical cost sharing group that sets its own rules and limitations. Since LibertyHealthShare is not technically an insurance company it is exempt from federal health care regulations. Monthly contributions are collected as part of a large fund to be used after a bill is received from a member’s doctor.

These kinds of cost-sharing strategies will be important tools in the future for softening the blow of rising insurance costs created by the political quagmire of increased government meddling since the mutual-aid era.