In the early years of the Reagan Revolution, Senator Robert Packwood, then the powerful Republican chairman of the Senate Finance Committee, offered a robust — if unusual — defense of the tax exclusion for employer-provided health insurance: It prevented the government from getting bigger.

“The one reason we do not have any significant demand for national health insurance in this country among those who are employed is because their employers are paying for their benefits,” he argued. “I hate to see us nibble at it for fear you are going to have the demand that the federal government take over and provide the benefits that would otherwise be lost.”

This reasoning drives American policy making to this day. Whether he realized it or not, Mr. Packwood was effectively explaining why the United States has, alone among advanced nations, built a government on the idea of keeping the government at bay.

Employer-provided health insurance is often portrayed as a result of serendipity. In 1942, the National War Labor Board allowed employers to get around wage and price controls by luring scarce workers with fringe benefits. In 1943, the Internal Revenue Service cemented its popularity by allowing employers to contribute to the health plans tax-free.