AgTalk Home
AgTalk Home
Search Forums | Classifieds (7) | Skins | Language
You are logged in as a guest. ( logon | register )

When did health insurance become a thing?
View previous thread :: View next thread
   Forums List -> Kitchen TableMessage format
 
CMN
Posted 1/17/2019 09:30 (#7251096 - in reply to #7250453)
Subject: The 40's


West of Mpls MN about 50 miles on Hwy 12
Is when employers jumped on the healthcare bandwagon to avoid paying taxes.

https://www.peoplekeep.com/blog/part-1-the-history-of-u.s.-employer-...

The employer-provided health insurance industry that exists today is largely the unintended result of a temporary tax break from the early 1940s. This tax break became the basis for U.S. healthcare.

Before Employer-Provided Health Insurance
Prior to World War II, most Americans paid for their own medical care, either directly to the provider, or beginning in the 1930s, through the Blue Cross nonprofit health insurance entities which were created to offer guaranteed service for a fixed fee. Back then, health insurance really was insurance - providing coverage only for major items like hospitalizations that people could not afford to pay for themselves. All other expenses were paid out-of-pocket directly to the provider.

The Birth of Employer-Provided Health Insurance
During World War II, the federal government was wary of post-war inflation. The administration saw the terrible devastation hyperinflation wreaked on post-World War I Germany and they were determined to hold it at bay through wage and price controls which they instituted during the war. In reaction to the wage controls, many labor groups planned to go on strike en masse. In order to avert the strike, in a concession to the labor groups, the War Labor Board exempted employer-paid health benefits from wage controls and income tax.

This historical accident created a tax advantage that drove enormous demand for employer-provided health insurance plans over the previously more common individual health insurance. Employers received a 100% tax deduction while the benefits employees received were exempt from federal, state, and city taxation.

The Result
As early as the 1940s, when the U.S. presidential administration tried to end the tax break and reform healthcare, the employer-provided health industry was already dug-in. In addition, labor groups preferred the employer-provided health insurance model. By the mid-1960s, employer-provided health insurance was almost universal.

The employer model worked well while costs remained low and employees stayed with the same company for their entire career. However, as we will discuss in our next post, as healthcare costs increased and employees began to change employers regularly, the system began to erode - starting in the small employer market.




Edited by CMN 1/25/2019 11:50
Top of the page Bottom of the page


Jump to forum :
Search this forum
Printer friendly version
E-mail a link to this thread

(Delete cookies)