In 1942, Franklin Delano Roosevelt inadvertently committed the original sin of American health care. Driven by a wartime economy, inflation had risen to an alarming 10 percent. Economic policy was a bit of a simpler game then, so Congress just passed a law — the Stabilization Act of 1942 — instructing the president to stabilize prices and wages. FDR followed up by ruling that businesses could not significantly increase wages or salaries without authorization by the National War Labor Board. Problem solved.
Except, as it turned out, businesses still wanted to hire the best workers. They couldn’t attract them by increasing salaries or wages, so they looked elsewhere. Health insurance fell outside the scope of Roosevelt’s executive order, so firms competed with each other by funding increasingly generous health-insurance policies. Around the same time, an administrative ruling held that insurance was non-taxable in many cases, a policy that was broadened and written into the statute books in 1954. Over the following decades, private insurance became almost synonymous with employer insurance. Today, 49 percent of Americans get insurance from their employer, with another 34 percent on Medicare or Medicaid and 9 percent uninsured. Only 7 percent participate in the individual market, 4 percent through the Obamacare exchanges. (Another 2 percent get health care from other public sources, such as the VA.)
