What socioeconomic effect was seen due to the exclusion of health insurance from taxable income after World War II?

The exclusion of health insurance from taxable income after World War II had significant socioeconomic effects, particularly in fostering an environment where employer-sponsored insurance became the norm for many American workers. This tax provision encouraged employers to offer health insurance as a benefit, since they could do so without additional tax burdens. With individuals not having to pay taxes on employer-provided insurance, it became an attractive compensation option for businesses looking to attract and retain employees.

As a result of this system, reliance on employer-sponsored insurance increased substantially, leading to the establishment of a workforce that predominantly obtained health insurance through their jobs. This had long-lasting implications on the structure of the U.S. healthcare system, making access to health insurance predominantly tied to employment, which in turn influenced job mobility and economic security for workers. The rise in dependence on employer-sponsored insurance also created challenges in the healthcare market, particularly for those who were unemployed, self-employed, or working in smaller companies that may have been less likely to provide comprehensive health benefits.