The history of employer-sponsored health insurance

A reader asked for some background and history on employer-sponsored health insurance (ESI, in wonk speak). I could write it, but so many others have already covered this so well, some in blog form. Here are some ungated resources:

In very brief summary, from David Blumenthal:

The heavy reliance on employer-sponsored insurance in the United States is, by many accounts, an accident of history that evolved in an unplanned way and, in the view of some, without the benefit of intelligent design. “If we had to do it over again,” says economist Uwe Reinhardt, “no policy analyst would recommend this model.” The story of the emergence of employer-sponsored insurance has already been told, but key elements are worth repeating to provide a perspective on the current state of this uniquely American institution.

Two historic events prepared the way for the emergence of this system of insurance. The first was the decision by President Franklin D. Roosevelt after his election in 1932 not to pursue universal health care coverage. The second was a series of federal rules enacted in the 1940s and 1950s on how employer-sponsored insurance should be treated with respect to federal taxes and in labor negotiations.

ESI and the tax treatment thereof is, by the way, one of what Paul Starr calls American “policy traps“.

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