> Employer provided health "insurance" can be paid for with before-tax dollars.

Employers that offer health insurance write it off as an expense. They don't payroll taxes on it (unemployment or social security). That means it's roughly 10% cheaper for the employer to offer health insurance instead of pay the equivalent in salary.

From the employee's side, an employee pays tax on salary before medical spending under normal circumstances, but health insurance is untaxed. So if an employee gets higher salary, he'd pay taxes on his salary, then buy his antibiotics. If insurance covers it, no taxes.

That's why insurance covers inane little things - both employers and employees want all medical spending to be covered by health insurance for tax reasons. Health insurance covered = no payroll taxes for employer, no income taxes for employee.

Now, the massive question is -- Why? This seems crazy, no? For most other perks, there's some taxes paid at some point. That's why your company doesn't buy all your food, housing, clothing, everything, and write it all off for you.

Answer: Lobbying. Insurance companies lobby hard and donate lots of money to political candidates. Both parties - Republican and Democrat - are in on this arrangement. This is one of the reasons insurance is so crooked - perverse incentives that both parties support.

On insurance, the Republicans say, "We're lowering your taxes!" The Democrats say, "We're helping people!" That's not quite right for either of them. They're making the system complicated and driving up costs that make the insurance companies and medical complex wealthier at everyone else's expense.

The artificially inflated costs make the system much worse for middle class people, as they lose flexibility in choosing their doctors, getting exact treatments they want, and so on. It hurts people who make responsible health and budgeting decisions, because they'd rather have the salary than the insurance coverage - but then their employer would pay 10% of what they gave in salary, and the employee would pay 30-60% on the income. As opposed to 0%/0% taxes on the insurance. It hurts the poor the worst, because they're least likely to have health insurance at all, and they get stuck in the artificially high priced market.

Just a terrible system all the way around. It'd be much better to cut taxes a few percent for all brackets and eliminate the health insurance writeoff entirely. Or alternatively, allow anyone to write any health expenses off the taxes. There'd be many, many better ways than the current system, which is bad for everyone except insurance companies, some medical people (though many of them feel handcuffed by the system and also dislike it), and of course, the politicians getting campaign money, sports tickets, dinners, vacations, gifts, and the rest of the legally-sanctioned corruption.