Because it wasn't taxed as income it became a benefit provided by business. Frankly is should be taxed the same as income (from the employer's prospective). It is a loophole that has screwed up the entire health care system. Instead of health insurance being between the customer/payer and the provider it is between the employer and the insurance company with the provider and “customer” in the middle of never never land. If people purchased health insurance directly it would be portable, as in travel with them, regardless of where or if they are employed. The insurance companies would also have to please you instead of your employer which have different interests at stake. The insurance companies could also reward those individuals that use it less saving them money. Anything that the direct user of pays only a fraction of gets over used which increases the costs to everyone.
And if the government wants you to get health insurance they can make it tax deductible for the individual taking your employer out of the equation.
Fire away...
Very good points. I may be in a very small minority here, but I have always believed that an employer-paid medical insurance plan should be treated no differently under the U.S. tax code than a cash bonus, a company car provided for personal use, etc.
Remember, there were wage and price controls and a company couldn't just offer higher wages as an inducement ~ so health insurance was used.
Without this system we'd lost the war and you'd be in concentration camps where all the guards would be Democrat politicians.
Just like today!