“More than any other country, the US relies on employers to provide insurance, with more than 175 million people gaining coverage through work. For more than 70 years, the nation has struggled to figure out how to provide care to people outside that system.”
The story starts by the fire. It’s October 1942. In his fireside chat, President Franklin Delano Roosevelt described a growing war.
“With every passing week, the war increases in scope and intensity,” he said. “That is true in Europe, in Africa, in Asia and on all the seas.”
At home there was also a battle — for workers.
“You’re coming out of the Depression and all of a sudden hiring ramps up,” said Sherry Glied, professor of public service at New York University. So many men are abroad that businesses are desperate for employees that “wages start to climb and prices start to climb. We start to see major inflation happening in the U.S. economy,” Glied said.
In that October chat, President Roosevelt argued that economic sacrifices at home were needed as much as any new tank.
“We shall be compelled to stop workers from moving from one war job to another as a matter of personal preference; to stop employers from stealing labor from each other,” Roosevelt said.
That year, the National War Labor Board forbade employers from raising their workers’ salaries — a wage cap. If our employer-sponsored insurance system has an origin story, it is this.
Beyond the wage cap, the labor board also ruled health insurance was exempt from the cap, so employers began to dangle health insurance as a benefit to attract the best and brightest.
The cherry on top: The IRS decided employer contributions to health insurance premiums were tax free, which meant workers paid less out of their pocket.