Health Insurance Not a Free Market – The Source of Employer Based Health Insurance

Health Insurance Not a Free Market – The Source of Employer Based Health Insurance

Due to the Federal Reserve and other government policies, inflation soared both before and during World War II (WWII). As a remedy to soaring prices resulting from the Fed’s created inflation, the government passed the 1942 Stabilization Act, limiting wage (salary) increases firms could offer, but not limiting the type of employee health insurance plans they could offer.  Congress capped wages, a socialist measure, preventing firms from competing for employees through wages. Firms want the best labor (employees) and without being able to offer competitive wages, they were forced to compete through offering better health insurance plans. Congress through wage control, a socialist device, forced employers to compete by offering better health insurance to their workers by banning competitive wages.

Further, in 1943 and in 1954, the government gave preferential tax treatment for companies contributing to employee health insurance plans, providing financial encouragement and a tax advantage based form of compensation.

The health insurance market has been manipulated by government since its inception. During WWII, our government’s socialist measures of wage control and the ensuing preferential tax treatment have fostered a government involvement in the health insurance market.  The health insurance market has not been and is not a free market.  It will not be free until government strictly limits its interference.

Mises.org – The Health-Insurance Market Is Not Free – http://mises.org/daily/3727

Economic History Services – Health Insurance in the United States – http://eh.net/encyclopedia/article/thomasson.insurance.health.us