How and why the heck are employers sandwiched between the insuror and the insuree?
Let’s take a look at a little history.
I’m going to summarize a great article, Health Insurance in the United States http://eh.net/encyclopedia/article/thomasson.insurance.health.us, however, I encourage you to read the article in its entirety.
The shift to employer based health insurance began during World War II and price controls that restricted employers from increasing wages to compete for labor. Exempt from the 1942 Stabilization Act was employee insurance plans. Therefore, employers used the plans as a way to differentiate themselves and attract desired employees that were in short supply. In addition, the Labor Relations Board and later the Supreme Court paved the way for unions to include insurance benefits in their “negotiations” with businesses. Finally the government made employer’s contributions to health insurance exempt from payroll tax as well as exempt from employee taxable income.
In sum, there is no magic to why employers are a conduit for employee healthcare. More to follow…
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