[dodobirdlord]

> Fun bonus fact, employer based insurance was first offered as a workaround for world war 2 era wage controls.

Plus, its tax incentivized in three different ways.

- The employer can deduct it as a business expense, reducing corporate profits on which they have to pay income tax. In fairness, wages work the same way...

- ...but! The employer doesn't have to pay payroll tax on the amount it adds to their payroll.

- And while the employer puts it on the employee's W2, it doesn't contribute to their taxable income.

Dodging two kinds of income tax and payroll tax means that it works out to be way cheaper for a company to buy health insurance for their employees than it would be to raise their employees pay enough that they could buy the same insurance themselves, and that's before the company leverages its purchasing power to get good deals from insurance companies. It's an absurdly strongly incentivized system.

[sidlls]

Companies big enough that "buy health insurance for their employees" is a thing pay insurance companies to administer the plans and they pay the medical costs as well. When an employee of such a company files a claim, the company ultimately pays the cost. I'm skeptical increased payroll taxes are more than these companies' cost to provide insurance. Also, payroll taxes themselves are also deductible.

[dodobirdlord]

> I'm skeptical increased payroll taxes are more than these companies' cost to provide insurance.

Doesn't seem unlikely to me, once you have enough employees, average cost per employee ends up being about the population average, skewed heavily by the fact that the company isn't employing very many people past retirement age where so much of total medical expense lies. Profit margins for health insurance companies aren't very high, so after administrative costs, what the average person/company pays in healthcare insurance is about what the average person accrues to their insurance in healthcare costs.

> Also, payroll taxes themselves are also deductible.

Shifting compensation to untaxed benefits brings the savings from corp_tax_rate * payroll_tax_rate to payroll_tax_rate.