An American Sickness: How Healthcare Became Big Business and How You Can Take It Back

by Elisabeth Rosenthal

Transformative technologies rapidly spread across the developed world. Abbott Laboratories made and patented the first intravenous anesthetic, thiopental, in the 1930s. Massachusetts General Hospital started the first anesthesia department in the United States in 1936. The first intensive care unit (ICU) armed with ventilators opened during a polio epidemic in Copenhagen in the early 1940s. Five dollars a day and a twenty-one-day maximum stay were no longer enough. Insurance with a capital I was increasingly needed. A private industry selling direct to customers could have filled the need—as it has for auto and life insurance. But a quirk of history and some well-meaning policy helped etch in place employer-based health insurance in the United States. When the National War Labor Board froze salaries during and after World War II, companies facing severe labor shortages discovered that they could attract workers by offering health insurance instead. To encourage the trend, the federal government ruled that money paid for employees’ health benefits would not be taxed. This strategy was a win-win in the short term, but in the long term has had some very losing implications.