Healthcare thru employment began as a perk for employees. Everyone else just paid out of pocket for regular care. And yes, it was priced into wages.

Even today, most people will pay several hundred dollars a month for insurance; the employer will pay several hundred dollars and the plan will still have a $2K or so deductible. That's a lot of money that most people make no use of at all.

If you pay out of pocket it is post-tax. If your employer pays it is barely at all taxed.

If you accept higher wages to pay it for yourself, it's a bad deal, either to the employer or to you or possibly to both.

> it's a bad deal,

Not necessarily: I gain the ability to switch insurances (imagine, for example, a "free market" where insurance has to compete…), job losses or changes don't affect my insurance, etc. Actual competitive pressure and lower switching costs should, in theory, drive the price down.

Also, IIRC, insurance premiums paid with post-tax dollars are deductible, so they're not really post-tax. However, that deduction is part of the itemized deduction — while currently most people are not itemizing (as they do not have enough itemized deductions to hit the "it is worth it" threshold), my napkin math says that throwing HC premiums in there — since HC is so damn expensive — tips the scale / breaks the threshold for basically any normal income level.

But this is also an "imagine if" thread. Imagine if we made healthcare premiums outright deductible to alleviate the problem you've identified?

I also was buying out of pocket while employed for awhile. Unless you have a qualifying event you can only switch insurance at the beginning of the year, at least from the insurance options I was able to find that fit my family.

I honestly didn't even realize the thing about the standard deductible until I had already done it. I was shocked to find I couldn't deduct it because I'd have to use the itemized deduction which would have been lower. I just assumed my insurance could have been deducted like it was when I bought it through my employer... how wrong I was.

But yes I would absolutely prefer the "imagine if" scenario.

Not if it is an HSA like setup which is pre tax.

But you're right, this taxation intertwine is another tangle that shouldn't exist. Too much energy is spent by everyone trying to optimize take home pay, coverage etc.; and lower wage workers who just don't have the mental cycles to do any thinking get shafted.

You should think of a tax deduction less as "free money" and more as "behavior the government wants to subsidize."

"This is a better paradigm because the government has decided to subsidize it" isn't a particularly compelling argument.

It's not a compelling argument for society, but it's a compelling argument for the individual at the instantaneous moment of making that microeconomic decision.

Sure, I thought we were talking about what makes sense for us to do as a society, not as individuals.

The US pays more per capita for healthcare than any developed nation. We should redirect those funds to more taxes to pay for Medicare for all. Costs will go down and your healthcare will no longer be tied to your employment. As a bonus, everyone gets healthcare.

Don't be naive. Medicare reimbursement rates are artificially fixed below the market rate in order to hold down the federal budget. This kind of works right now because Medicare ends up with a hidden cross subsidy from commercial health plans with higher rates (often explicitly set as a fixed multiple of the Medicare rate). If we put everyone on "Medicare For All" then those subsidies will disappear and queues will get much longer. So not everyone "gets" healthcare if they have to wait a year for an elective procedure.

Also, original Medicare Part A/B doesn't cover certain types of healthcare at all such as prescription drugs. So not everyone on Medicare "gets" healthcare today. That's why many Medicare beneficiaries choose to pay out of pocket for Drug Coverage (Part D), Medicare Advantage, and/or Medicare Supplement (Medigap) insurance.

But what about billions in profit for healthcare insurance companies and their business model to collect money and deny benefits?

If Congress could decide to agree on something, they announce taxes are being raised by X% to provide Medicare for all next year. Next year, employers stop providing healthcare via insurance companies and everyone signs up for medicare. Done.

One of the huge fights about ACA from the left was so-called "Cadillac Plans": Unions negotiated excellent medical insurance coverage in lieu of wages for their members. If you suddenly axed employer-provided coverage, nearly every union in the US would want to renegotiate contracts to account for that.