Optimist Economy How Health Insurance Got Shackled to Jobs
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Oct 14, 2025 Discover the historical quirks that tether health insurance to your job, costing Americans $384 billion a year in tax breaks. Explore how WWII wage freezes led employers to offer health benefits, solidifying a system that suppresses wages and locks employees in place. Learn about Truman's bold 1945 health plan that could have changed everything and how today's employer coverage often leaves people with high out-of-pocket costs. Delve into the consequences of job lock and the implications for future reforms and universal coverage.
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Origin Of Employer Plans
- A Dallas school superintendent created a sick fund for teachers and later adapted it into Baylor Hospital's prepaid plan in 1929.
- That Baylor plan evolved into Blue Cross and sparked hospital and physician prepaid plans like Blue Shield.
War, Wage Controls, And A Tax Quirk
- WWII wage freezes led employers to expand fringe benefits like health plans because wages were capped.
- The 1953 tax exemption made employer-paid premiums untaxed and a deductible business expense, locking in employer coverage.
Truman's Lost National Plan
- Harry Truman proposed universal comprehensive health coverage in 1945 including paid medical leave and funding for medical schools.
- His plan failed due to opposition from doctors, hospitals, and business groups, shaping today's private-dominant system.
