Healthcare reform: As the debate rages, remember Boss Tweed

As we watch the healthcare debate rage on in Congress, it's helpful noting that wholesale change of a flawed-but-longstanding system has happened in the past, despite the odds against it. A good example from the history books: Boss Tweed.

"Everything will fall apart if we change it." "The government will ruin it." "The government could never do it as well as the private citizen can." "Give us a way to opt out."

The refrains from Capitol Hill's healthcare debate may remind us of a past adventure in "socialism": not the time when we switched from private militias to standing government-organized armies (although that happened, too), but the pre-Civil War era in New York City, when the job of firefighting was wrested from the private sector and placed in government hands. It's hard to imagine that anyone today thinks that old system of response was superior. But that's pretty much how our healthcare system works -- and it's a mess, letting a whole class of people fall through the cracks.

In the old days in New York, you bought insurance for your house, and if disaster befell you, you first got attention from brigades sent by your insurance company. And in a city built from wood, fires were a constant threat. But the ones who rushed to put the fires out were volunteer departments, backed by private insurance companies, sanctioned by the government to keep the population and its assets safe.

But those volunteer forces were so disorganized as to often leave citizens' safety in doubt. While buildings burned, firefighters recruited volunteers from street gangs, brawled, and beat up rivals in other companies. During the Draft Riots of the Civil War -- depicted in Martin Scorcese's Gangs of New York -- Black Joke Engine Company No. 33 set a draft office ablaze, then prevented other companies from putting it out.

The insurance companies became a part of the problem. Still, the job usually got done, because, Luc Sante wrote in Low Life, "What they lacked in professionalism, they made up in enthusiasm."

But slowly, as people felt more violated by the inefficient and corrupted system, alternatives began to emerge. Private fire companies, like the Fire Insurance Patrol, were established to fill in the gaps. But there was a conflict -- they were established by insurance companies who stood to make a bundle by rushing to fires to salvage whatever they could. So the very companies charged with protecting citizens were also profiting by failing to prevent fires -- just as today's health industry makes money when you undergo an optimal number of procedures.

Yet despite living in a city full of tinderbox buildings, citizens felt they lacked the power to change things -- at least in New York. Cincinnati became the first American city to ditch the patchwork of self-interested volunteer companies and institute the country's first "paid," or fully governmental, fire department, in 1853. The timing was technologically fortunate: Cincinnati that year started using steam engines instead of laborious hand pumps, further sidelining the gangs of volunteer firemen.

But how did New York's rickety volunteer system survive so long? Because it had friends at the top. In New York, one friend was named Bill Tweed, who later ran the infamous Tammany Hall political machine.

Tweed is now remembered as one of the most corrupt politicians in American history, and his powers of public manipulation were timeless. Behind the scenes, he was all about cronyism and kickbacks, but publicly, he held the vote by invoking Christian themes at every opportunity, and directing huge sums of tax money to churches and charities. It was slick P.R., and his constituents ate it up.

It bears noting that Tweed got his start in as one of those volunteer firemen. He led a brigade with the stirringly patriotic name Americus Fire Company No. 6. Tweed became known for the red shirt he wore in his early days with the "Big Six," and even when he became a titan of political power -- and earned the menacing nickname Boss Tweed -- he always looked out for his brawling buddies of the Big Six, primarily because the fire companies had such a strong influence on politics. The fire insurance model bred corruption. Tweed, the former fire company foreman, was in charge of supervising his friends and colleagues, so naturally, he and his team did nothing to wean citizens off the fire-insurance model. They had profited too much from it.

In the 1850s, a politician overseeing the volunteer companies blew the whistle. Alfred Carson spoke out about his companies' failings and their slipshod maintenance. But Tweed censored Carson's critical reports and ultimately got Carson replaced by Harry Howard, a Tweed man who, not surprisingly, didn't want to change the system.

Still, reformers like Carson had made an impression on the public, which gradually decided it deserved a better system. Both police officers and firefighters were transitioned into forces fully backed by the government -- which managed the transition from private to public so poorly that there were two police departments for a month in 1857.

In his book Five Points, Tyler Anbinder wrote: "The Irish-American condemned the [change] for its 'partisanship, odiousness, and tyranny ... It virtually disenfranchises the people' by taking control of municipal institutions away from the city's elected leaders."

The argument that reform would make the sky fall was familiar then, too. Opponents convinced immigrants that the changes were part of a plot to centralize government control over their lives, and to make them irrelevant. The city's poor were whipped into a frenzied anger that sparked a deadly riot on July 4, 1857, as gangs attacked any cops they could find from the new professional force. They swarmed the streets with knives, pistols, and iron bars. Cops and gang members alike were killed, and the militia was called in to bring calm. (A recession began in that year, too.)

The government placated the volunteers by allowing them to intermingle with the new system -- shades of the "public option" opt-in of today's healthcare debates -- and by promising their entrenched members first crack at the paid jobs. Compromise paved the way to our current system -- a system once so despised that people killed each other to prevent it.

Just as with the political benefactors of New York's fire insurance industry, many of the bureaucrats wrestling today with healthcare reform and regulation came from the ranks of the health-insurance industry. And today's elected politicians have strong links, too: Sen. Joe Lieberman's swing vote determines the structure of the bill -- even as, reformists argue, his wife works with a lobbyist firm that serves the health-insurance industry.

Tweed's grasp on absolute power weakened after his fire-insurance system was extinguished. Within five years, he was under attack, and soon after, he was sent to prison on corruption charges. Tweed died behind bars, and Americans adapted to the new system of a government-led fire force.

Few would argue that the greater good wasn't served by the painful switch from private fire insurance. Then again, few are arguing about the greater good at all.

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