Whether it is a world war or a pandemic, authorities are quick to enact policies during a crisis to protect the public from harm. These policies are enacted with the best of intentions, but they often have long-term consequences that far outlast the crisis.
For example, during World War II, the government instituted wage and price controls to help with the war effort. But there was a problem. Businesses couldn’t recruit enough workers without offering higher wages. To sidestep these restrictions, employers started paying for their employees’ health insurance as a new benefit.
Businesses and workers then successfully lobbied Congress not to count health insurance as income, effectively making it tax free.
Wage and price controls were lifted after World War II, but the tax-free status of employer-paid medical care remained in place.
Today, the government is still subsidizing expensive employer-paid insurance. These plans give patients fewer reasons to consider the cost of their healthcare choices, encouraging them to use more care than they really need. Ultimately, this drives up medical costs and healthcare premiums for all.
If not for a temporary decision made in the midst of a world war, today’s health care system would offer Americans more options and lower prices.
When a crisis happens, we expect our policymakers to respond. But we should remember that policies that sound good in the short term can have bad long-term consequences.
