Q: I recently came back from Canada visiting friends who’d just had a baby, and I was impressed with the quality of medical care I saw -which as we all know- Canadians get for free. Sure I was jealous, but it made me wonder, how did healthcare in the US become tied to employers instead of the government?

A: Most industrialized western nations (Australia, New Zealand, Netherlands, Israel, all of Europe) as well as many not-so-industrialized ones (Tunisia, Panama, Estonia, Costa Rica), DO offer their citizens some sort of universal healthcare.

To learn how the American healthcare system ended up tied to employers, we have to go back to the early 40’s and look at two important events –somewhat related, but not planned– which inadvertently cemented the future of health insurance to what we have today.

First, let’s rewind the clock to 1942, WWII was raging and employers were facing a shortage of workers in a highly competitive job market, as factories had more work than bodies. Not surprisingly, they tried to attract workers by increasing wages, so much so that the government feared hyper-inflation which would spill to other areas of the economy. So it issued an an executive order that –among other things- prohibited employers from raising wages, effectively freezing them. So employers got creative and started offering fringe benefits such as health insurance to entice workers to switch jobs.

The second event happens the following year. In 1943 the IRS ruled that employer-based health care should be tax free.

According to NPR, those two events contributed to growing the number of the population covered “by some kind of private, voluntary health insurance plan” from a mere 9% of the population in 1940 to 70% in the 1960s.

So, as the aptly named NPR story Accidents Of History Created U.S. Health System says: “It turns out there never was any central logic at work.” No wonder. Our current system is overly complex and expensive. Even those of us who are fortunate enough to have employer health insurance are daunted by the yearly re-enrollment paperwork and choices offered.

This is all the more reason to come up with a fix for this “historical accident” we call our healthcare system.

©Copyright Eva Del Rio

Eva Del Rio is creator of HR Box™ – tools for small businesses and startups. Send questions to Eva@evadelrio.com