Health Insurance Shouldn’t Be Tied To Employment

If my car insurance isn’t linked to my employer, should my health insurance? A recent projection by S&P Capital IQ, a research firm in the financial industry, estimated that 90% of Americans will receive health insurance from government exchanges by 2020. If this estimate were to come to fruition, it would represent a monumental shift in the structure of the American health care system. For over half a century, employer-sponsored health insurance (ESI) has been the unquestioned norm. Instead of retreating from the unknown, however, we should embrace the delinking of health insurance from our jobs. Health insurance, after all, is a product like any other and deserves no special treatment.

If given the opportunity to construct a health care system from scratch, almost no one would adopt ESI as its central feature. How, then, did it become so ingrained?

Like many policies, it was an accident of history. During World War II, President Roosevelt signed Executive Order 9328, which froze prices on anything that affected cost-of-living, including wages, to control wartime inflation. The War Labor Board, however, subsequently ruled that the wage freeze did not apply to fringe benefits like health insurance. Thus, in order to recruit and retain employees, employers could no longer offer increased income but could use these so-called fringe benefits, like health insurance, to attract talent...