The Public Option

Historically-minded people often discern similiarities between events past and present and can’t resist the temptation to share them.  So be warned, here’s one now.

The current debate over the expansion of the federal government’s role in providing health insurance to Americans resembles the discussion–to put it mildly–that occurred in the mid-1930s on whether the United States should fund the extension of electrical service to rural areas unserved by investor-owned utilities.  It was the 1930’s version of the familiar public-versus-private debate that is as old as the republic.

The need was obvious. Ninety percent of the six million American farmsteads did not have electricity. Basic amenities that urban Americans had enjoyed for decades–modern lighting, running water, indoor toilets–were absent, as were “luxuries” like radios, refrigerators, automatic hot water heaters and kitchen stoves that did not burn wood.


In the 1930s, standards of living on American farms lagged far behind those in cities. Photo: Wisconsin Historical Society.

That was in the farm house. In farm yards, barns, sheds and shops, electrical power would save labor, make for a better-lighted, safer working environment, increase productivity and boost income. An electric water pump meant a farmer had only to turn the handle on a faucet to water his livestock instead of pumping hundreds of gallons by hand or relying on a windmill that did not always spin. Electric motors could also power the numerous choppers, grinders, mixers and loaders that were vital to handling everything from shelled corn to shredded silage. Electricity would bring American farming into the 20th Century.

In 1934, President Franklin Roosevelt established the Rural Electricification Administration. The following year, Congress appropriated $100 million and charged the REA to make low interest loans to public and investor-owned utilities to run power lines in rural areas.

Then the debate began. The power companies said that if they borrowed the entire $100 million they could extend power to another 200,000 farms–maybe. That would leave about 5.2 million unserved. A dismayed Senator Frank Norris, the prairie progressive from Nebraska, succeeded in amending the REA legislation to require that loans  be made only to organizations  agreeing to extend power to all consumers in their service area. Norris’s “all-inclusion” provision prevented the power companies from using taxpayer dollars to “cherry pick”  their customers. Obliged to serve both the big farm on the county highway and the hardscrabble homestead up the hollow, the power companies passed on the loan program.

Farmers themselves stepped up. Often led by university-extension county agents, they organized cooperatives that collected membership fees as low as one dollar per farm, established local distribution systems, and purchased power from the investor-owned utilities.

In Wisconsin, two cooperatives lay claim to the honor of being the first to deliver power to farmer members. On or about the same day in May 1937, Richland County Electric Cooperative and Columbus Rural Electric Cooperative energized their first power lines.

1950s Iowa farm kids, part of the first generation of rural Americans born on farms with electrical power.  Photo: Author.

1950s Iowa farm kids, part of the first generation of rural Americans born on farms with electrical power. Photo: Author.

Cooperatives spread and today there are over nine hundred rural electric cooperatives serving forty-two million people in forty-seven states. There would be more had the private utilities not responded as they did. Faced with competition from the “public option” they discovered that they really could extend service to millions–not just thousands–of farmers.

As a result, electrical power came to rural America. It was a precondition for the transformation that occurred in the countryside in the years after World War II.

What would a public option as real as the rural electric cooperatives mean for American health care today?

–Michael Goc

One Response to The Public Option

  1. I can only imagine that there are already some health care cooperatives out there, but I tend to think that the entirety of the health care system is flawed. The flaw is in large part due to the profit motivations of the health insurance companies and the relationships they have established with the health care providers.(perhaps they thought the setup of the electrical utilities was entirely flawed in the 30’s as well.)

    While access to health care is a problem its not as much of a problem as the cost of that health care. There’s really two problems here that exacerbate each other. On the insurance side my biggest problem is the profit motivations that drive the insurance companies. They have a responsibility mandated by law to answer to shareholders and with that kind of onus on them they do terrible things, like deny coverage to people who truly need it and actually only want to cover healthy people who won’t cost them any money.

    On the access side, the beauracratic mess that exists in large part due to the insurance companies and their relationships with the providers restricts access to healthcare and makes getting care more difficult.

    For instance, I had an MRI on my left knee recently, expecting my insurance would pay for their contracted portion of the test. Instead I get this two page questionnaire denying coverage because they want to know if I’ve been in an accident or injured at work and when and where and who can they blame for this so they don’t have to pay for this test because if I have a knee problem somebody must be to blame for this!

    Oh, and included with that questionnaire is a contract that I have to sign saying that even if I say I have not been injured at work or in an accident (I wasn’t) that ANY monies I might receive related to this injury be remanded directly to the insurance company to cover their costs associated with this injury.

    Wait a minute, I thought that’s what they were there for?

    Silly me.

    A real single-payer public health care solution would be nice. Not some hodge-podge effort like the one they’re attempting to ram through congress.

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