Employment-based private insurance

[ClearDay]

This question might have a very obvious answer for you guys, but it's not that apparent to me. I never understand how the wage and price control of WWII foster fringe benefits such as health insurance. Employers have to pay for health insurance... so I don't see how this would help control the price???

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[Trismegistus4]

I don't know anything about price controls, but the phenomenon of employers offering health insurance was simply a means of circumventing the wage freeze. If raises and bonuses were temporarily outlawed, what could you give your employees? Benefits. Health insurance just became the substitute for a raise or bonus.

You know, people are always asking about how we in the USA got into our unusual predicament of health insurance being tied to employment... an equally interesting question to me, and one which I've never seen discussed, is how did the nations which offer nationalized health insurance get into their situation? At one time in the USA, medical care was available only under the fee-for-service model. This must have been the case at one time in Western European nations too. How and when did they make the switch, and why did they go straight from free-market directly to completely-socialized?

 

[Gut Shot]

Interesting question. My two minute Google search before I head off to work yielded (once again) Malcolm Gladwell's article on Moral Hazard:

http://www.newyorker.com/fact/content/articles/050829fa_fact

"America’s health-care mess is, in part, simply an accident of history. The fact that there have been six attempts at universal health coverage in the last century suggests that there has long been support for the idea. But politics has always got in the way. In both Europe and the United States, for example, the push for health insurance was led, in large part, by organized labor. But in Europe the unions worked through the political system, fighting for coverage for all citizens. From the start, health insurance in Europe was public and universal, and that created powerful political support for any attempt to expand benefits. In the United States, by contrast, the unions worked through the collective-bargaining system and, as a result, could win health benefits only for their own members. Health insurance here has always been private and selective, and every attempt to expand benefits has resulted in a paralyzing political battle over who would be added to insurance rolls and who ought to pay for those additions."

 

[ClearDay]

Thanks for the responses...

Well, I did a little research after I posted the question. Apparently, one of the reasons company initially started employment-based health insurance is because they can count this as expenses and not pay taxes. Employees are also exempt from paying income taxes on health benefits since they're not paid from employers to employees in 'cash'. Once people realize how much money they can save by employment-based insurance, they were all over it. According to my sources, that's when organized labor start negotiating for health benefits.