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“Let’s Take Our Medical History” Nobody Ever Planned This… October 20, 2009

Posted by Admin in Health Insurance.
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This story, heard last weekend on the radio program This American Life was very illuminating about how we got our imperfect health care and employer based group insurance system. There were 4 steps in the last hundred years that got us to the system we have now. They were all accidental.

The high points are:

  • At the turn of the 20th century hospitals were …”dark dirty places where the poor went to die”.  This gradually changed to marketing them as places with happy outcomes: come here to have babies, tonsils out, appendectomies etc.
  • In the 20’s, someone notices that Americans are paying more for cosmetics than health care. Baylor University began to offer a plan for .50/month for 21 days in the hospital a year to teachers. This eventually evolved into Blue Cross…
  • WWII: The war economy. Wage and price controls encourage more employers to add health insurance plans in order to attract workers during the war, as labor was scarce.
  • A bureaucrat at the IRS made a routine ruling in 1943 that in some cases employers don’t have to pay taxes on health insurance premiums for their workers.  It entered the IRS code formally in 1954. Participation increased.

There is a great story towards the end about what if  employers provided our food insurance instead of our health insurance. Makes you think about the system and maybe that keeping two facets of our current system; employer based instead of community based plans and tax subsidized through employers might not be a good idea.

Community based coverage instead of employer based coverage I get.  But removing the tax subsidy? That worries me a little unless my wages would go up to compensate or I could control a tax subsidy of my own. How to equalize that benefit is one of the $64,000 questions.

Listen to the show. What do you think?



1. Open Season-er-Open Enrollment « Full Coverage - November 12, 2009

[…] health care costs (mostly borne by our employers through action taken in the 1950’s). (Read this post for the 4 accidents that created our current system) He does seem to have a few studies to back him […]

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