The Shadow Welfare State: Labor, Business, and the Politics of Health Care in the United States (review)

The study of health care policy stands out from research in other policy areas for its sustained interest and leadership in larger debates about U.S. and comparative politics as well as democratic governance. Harry Eckstein's analysis of the British National Health Service contributed significantly, for instance, to the flowering of interest in group theory in the 1950s. Eckstein's use of health politics to rethink theories of politics more generally has been continued (in different areas) by Lawrence Brown, Theodore Marmor, James Morone, and a number of others.

Marie Gottschalk's The Shadow Welfare State fits within this important broad-minded tradition in health care scholarship by emphasizing the heated debate in comparative public policy about the role of organized labor in the development of welfare states. Previous research in comparative public policy has tended to offer a negative account of the U.S. welfare state development: a series of critical explanatory variables is lined up (extent of union membership, national administrative capacity, and so forth), and the United States is scored "no." This approach has shown the U.S. welfare state as "different" among advanced industrialized nationals but has not offered a positive or constructive comparative account for precisely why U.S. welfare state development failed to incorporate national health insurance and other critical benefits considered essential to a fully constituted welfare state.

The Shadow Welfare State makes a much-needed contribution to developing an explanation for the U.S. welfare state that is constructive and comparative. For Gottschalk, the current tendency to bifurcate the impact of unions on social welfare provision into one of two categories—obstructor or enabler—misses their distinctive institutional role and the impact that unions did exert on U.S. social policy.

In particular, The Shadow Welfare State reinvigorates debate about the role of unions in welfare state development through a close examination of U.S. health policy and the impact of the internal politics of organized labor on it. Far from being hobbled by dwindling membership (as is commonly assumed in standard comparative accounts), organized labor emerges in this account as a "pivotal player in the politics of health policy" (1). Gottschalk's starting point is that unions have a politically intimidating arsenal that is rivaled only by business—formidable financial resources, close ties to one of the major political parties, a devoted cadre of activists, and other assets.

Although the story of unions in social policy typically begins with heated government debates and momentous decisions by presidents and prime ministers, Gottschalk begins with private social welfare provision and, in particular, the development by unions and employers of extensive programs, accounting for up to one-third of all social benefits. The Shadow Welfare State traces the emergence of a "patchwork" of employment-linked social benefits from three developments: the Taft-Hartley plans for health insurance and other social provisions, which were established under the Labor and Management Relations Act and are jointly administered by unions and employers; the self-insured health insurance plans allowed by the Employee Retirement Income Security Act of 1974 (ERISA) to operate free of most state regulations; and the widening practice of using the health experience of groups (not communities) to set the price of insurance plans. Organized labor worked with business to establish these three pillars of the private welfare state, which ultimately obstructed the impetus toward national health insurance: the Taft-Hartley plans offered an alternative to government provisions for the unionized, ERISA pulled the teeth on what could have been the forward edge of a reformist movement, and the "experience rating" of health insurance ushered in discriminatory insurance practices that pitted the sick against the healthy who demanded lower premiums.

Understanding the private welfare...