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http://www.heritage.org/Research/PoliticalPhilosophy/hl677.cfm

From Mutual Aid to Welfare State: How Fraternal Societies Fought Poverty and Taught Character
by David T. Beito
July 27, 2000

By the 1930s, fraternal societies had entered a period of decline from which they never recovered. While this trend was caused by several factors, including increased competition from commercial insurance and the lure of competing forms of entertainment, such as radio and movies, it was fundamentally due to a transformation in the nature of fraternalism. By the 1940s, conviviality and life insurance, instead of mutual aid, became the order of the day. But these inducements were rarely enough to attract and hold members.

One of the earliest reasons for the shift in fraternal priorities can be laid at the doorstep of the medical associations. As early as the 1910s, the profession, increasingly fortified by tighter certification requirements which reduced the supply of doctors, had launched an all-out war against fraternal medical services by imposing manifold sanctions, including denial of licenses against doctors who accepted these contracts. One highly effective method of enforcement was to pressure hospitals to close their doors to fraternal members who used “lodge doctors.” By 1914, Dr. Robert Allen in the Journal of the American Medical Association could state, with slight exaggeration, that “there is scarcely a city in the country in which medical societies have not issued edicts against members who accept contracts for lodge practice.” Some societies, such as the Security Benefit Association, responded to this pressure by building self-contained hospitals. They too, however, often ran afoul of medical society pressure as well as a federal tax code that discriminated in favor of third-party insurance.