Why The United States Is The Only Developed Country With An Employer Based Health Insurance

2534 WordsFeb 14, 201611 Pages
If one wants to understand why the United States is the only developed country with an employer-based health insurance, it becomes necessary to become familiar with the Internal Revenue Code of 1954. "The 1954 code is the document in which the federal government codified into law that companies can provide health insurance benefits to workers tax-free. This action affirmed a 1943 IRS Tax Court ruling that had also decreed health benefits to be nontaxable" (Kliff, 2015). Kliff explains that the decision to provide these health benefits at this time was made in the shadow of a wartime tax code. There were taxes put into place that were meant to stop wartime exploitation and help to keep the unions from shutting down production to extract wage gains. However, when health care was protected from these taxes, it immediately became of great value to employees, and companies benefited as they were able to keep it tax-free even after the war had ended (Kliff, 2015). A dollar used for health benefits is worth more to an employee than a dollar in wages earned because the dollar in health benefits is not taxed and the dollar in wages earned is taxed. Thus, there it is a huge discount off the price of health insurance, and this happened very quietly and basically unnoticed by most. However, when health care was protected from these taxes, it immediately became of great value to employees, and companies benefited as they were able to keep it tax-free even after the war had ended
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