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Xipe Totec

(44,558 posts)
7. Employers should never have been involved in health insurance in the first place
Tue Sep 4, 2018, 08:02 AM
Sep 2018

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.

https://www.peoplekeep.com/blog/part-1-the-history-of-u.s.-employer-provided-health-insurance-post-world-war-ii

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