[awongh]

That makes logical sense in terms of grabbing onto a specific mechanism for risk hedging, which would be how we accidentally and naturally arrived at this system.

But it doesn't make sense within a larger society in that you drop out of the pool of insurance-eligible people as soon as you have a health issue that limits your employability.

In fact, that specific case makes it seem totally insane and backwards. Why would you link a thing like employment to your health when your ability to work is directly tied to your health? What a crazy catch-22.

[ghaff]

As I understand it, a lot of reason was originally to end-run around wage controls and then got enshrined through some combination of collective bargaining and then generalized employee expectations. But to your point, even if you decouple from employment, it doesn't really help if you're paying $7K+ for individual health insurance as a person who is too ill to work. (Yes, larger companies in particular have disability insurance but this is hardly universal.)

[awongh]

There's definitely a psychological component of what people are willing to pay for and what costs get hidden- if the full insurance premium was shown to be directly taken out of your paycheck every month people would complain, but if the employer-paid premium isn't factored into your salary you don't know how much wages you're missing out on. Even if 100k salary with 10k of hidden premiums is the same as 110k with 10k taken out each month.

[ghaff]

There are some tax effects as well. But, yeah, people don't really think of benefits as coming out their paychecks although they are, of course, at some level whether they personally would ever take advantage of them or not. A lot of cross-subsidies happen with benefits.