Posted by Sir Four at 1:15pm Jul 8 '09There was a political debate, I think it was under the Truman administration (someone correct me if I'm wrong), over whether we should have a national healthcare plan or not. It was at this same time that companies found that they could get around the tax code by offering health insurance as a fringe benefit to attract employees. So what happened was, we (America) decided not to have a national plan but instead to allow this tax loophole to remain in effect so that employers continue to provide health insurance.
There are flaws with this arrangement, though. First, it is illogical that employment should be the conduit to obtain health insurance. Second, it is important to remember that employers offer health insurance instead of raising salaries because the insurance is tax-advantaged and salaries are not. Third, the tax advantage amounts to a huge government subsidy of the insurance companies which results in a distortion of the market. IIRC, it's worth about $60 billion per year. Fourth, the economic reality is that instituting the national plan creates costs that have to be paid in some way.
There are flaws with this arrangement, though. First, it is illogical that employment should be the conduit to obtain health insurance. Second, it is important to remember that employers offer health insurance instead of raising salaries because the insurance is tax-advantaged and salaries are not. Third, the tax advantage amounts to a huge government subsidy of the insurance companies which results in a distortion of the market. IIRC, it's worth about $60 billion per year. Fourth, the economic reality is that instituting the national plan creates costs that have to be paid in some way.
=/ I do see your point - Sir Four