Ellis: US employer healthcare system resulted from WWII wage freezes
Chris Ellis · The Future of Health Insurance in a Work Remote World · Nov 14, 2024 · at 2:16
Chris Ellis, co-founder of Thatch, explains the historical backstory of how employer-based health insurance developed in the United States.
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“So, in 1929, we had our first employer-sponsored health plans with Blue Cross, and people forget. The first 10 years of it was like a super niche product that nobody used, and it wasn't actually until World War II, where you had a lot of the labor market going to fight in Europe, and you had Congress issuing a wage freeze, and what happened was, because labor was scarce but they couldn't raise salaries to get new workers they had to find new ways to compete for talent, and health insurance was a way to actually have this loophole where we could give a better benefit, attract more workers. Congress got wise and said, hey, maybe we should just make it pre-tax, and then we won't have to worry about it at all, and so they did, and sure enough, a hundred years later, we've kept the same system ever since. And so, what kind of began is this genius marketing move from Blue Cross, and then kind of an accident of history with Congress and these world wars, ended up cementing this model that we have today that is very unique amongst most Western countries.”
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