As Americans individually acquire and pay for car insurance, life insurance and most every other type of insurance, why do the majority of us get employer provided health insurance? While the big answer to that question is complex, the simple answer is the salary and wage freeze of World War II. In 1943, the U.S. War Labor Board ruled that a war-time wage freeze did not apply to fringe benefits…and the rest is history. Pre-tax fringe benefits like healthcare insurance became the only way to recruit or retain employees in certain hard-to-staff businesses.
The desire to disconnect health insurance from employment has been the goal of advocates on both the right and left. From a broad-brush perspective, the left favored a government-run system, the right favored an individual, market-based system. Because those two non-employer-based systems are so radically different, employer-provided health insurance has remained the status quo since the 1940s.
Recently, the notion that the Affordable Care Act (Obamacare) could lead to the end of employer-funded health insurance is being recognized by entrepreneurs like Mark Cuban, lawmakers like Tennessee’s Bob Corker and Ezekiel J. Emanuel, a physician who served as an advisor on the creation of Obamacare.
Speaking with NYTimes.com recently, Emanuel said in the next two or three years, “a few big, blue-chip companies will announce their intention to stop providing health insurance. Instead, they will raise salaries substantially or offer large, defined contributions to their workers. Then the floodgates will open.”
Emanuel also believes few small businesses will join the SHOP exchanges set up for them and that most of those that offer coverage are even more likely than big companies to drop it, since those who employ fewer than 50 workers face no mandate to offer it in the first place, which Mr. Emanuel thinks is fine.
Do you think employer-provided insurance will soon come to an end? Share you predictions in the comments below.