Tonight's "Bill of Health" story on company health plans developed from a simple question: Why do companies offer health benefits at all? The average price of a company-provided health plan will rise by more than 10 percent in 2010 (according to the The Segal Company consulting firm), and when you consider companies pay somewhere between 75% to 85% of a plan's cost -- why do they even bother? After all, only two states (Massachusetts and Hawaii) mandate some form of coverage. For companies elsewhere, it's a voluntary effort.

The answer to the "why bother?" question is a bit of a history lesson. During World War 2, the nation's domestic war-related industries (building bombers, ships, and the like) needed lots of workers. But with so many men and women serving in uniform overseas, companies were competing for a limited supply of labor. In an ordinary world, companies might have been able to offer higher wages to attract workers, but US authorities froze wages by federal order (because of concerns about inflation).

So wartime employers turned to the only means they had left to attract workers: They offered to pay for their health insurance. And, as an added incentive to employers, authorities deemed "health benefits" as non-taxable. Flash-forward to the Internal Revenue Act of 1954, which codified all those World War 2 era moves into federal tax law. Employees received a benefit-value they didn't have to pay taxes on, and companies could write off the cost of buying health coverage as a "business expense."

Of course, companies have other reasons to continue to provide health coverage of some kind for their workers -- it's a tool to recruit and retain workers, it makes employees somewhat happier, and it helps maintain a healthier (and more productive) workforce. But the financial incentives for workers -- and employers -- remain as the most powerful reason why workplace-sponsored healthcare benefits continue to be the norm for American private-sector workers.

Jeff's report for "Bill of Health" is also part of the lead up to the PBS Special Report on Health Care Reform, which will air Thursday, September 24th at 9 PM on PBS stations across the nation. Tune in!