Doctor Leo Spaceman

“There are many volumes to be written on the history of what went wrong with American health care, but here is a short and very simplified version: The Roosevelt administration began imposing central planning on broad swathes of the U.S. economy in the 1930s, but in an effort to escape the Great Depression and to prepare the country for war. One of the things the administration did was to impose wage and price controls, and it was ruthless about enforcing them. The great newspaperman R. C. Hoiles, who had been a fierce critic of President Roosevelt’s creation of the Japanese internment camps, was fined a thousand dollars—not for cutting salaries but for giving his employees an unapproved raise. With the war on, businesses had to compete ruthlessly for good employees, but the wage controls prevented them from luring workers with higher pay. (Seriously—through a depression and the onset of a world war, the Roosevelt administration was cracking down on employers for paying people too much.) Thus was born the fringe benefit: company cars, expense accounts, and, most popular, employer-sponsored health insurance plans.  Because these benefits were not considered income per se, payments made by employers for health insurance did not come under the income tax, a situation that persists to this day. Over time, that produced a truly odd and destructive economic arrangement: The company store has been abolished everywhere except in health insurance. That creates perverse incentives on both sides. The insurance company is not beholden to the consumer, but to the consumer’s employer: Apple has to work hard to keep me happy to keep my business, but Aetna only has to be good enough that it’s not worth it to my employer to switch to another provider”

Excerpt From: Kevin D. Williamson. “The End Is Near and It’s Going to Be Awesome.” HarperCollins, 2013-05-01. iBooks.

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