Let's Get Away from Employer Provided Health Insurance.
- Keep the government out and let it happen (because it will). This emphasizes individual responsibility abd is a libertarian, almost Ayn Rand approach.
- Get the government in, big time.
The most radical approach--a single payer option--would relieve business of the need to provide health insurance benefits. While the costs of such a program should give everyone pause, it would be a boon to a U.S. business.
A more conservative approach could also be used to move the country away from employer provided insurance (where it is going away anyway). Some ideas that have been proposed and on which there is fairly widespread agreement.
- Allow individuals to shop for insurance coverage all across the country. This increases insurance competition and would reduce insurance rates some.
- Allow individals to buy health insurance with pre-tax dollars, which would put them on the same playing field as workers who get tax-free health insurance from their employers. (The negative version of this is treat employee benefits as income and tax them.) This is only fair--and should encourage people to buy their own health insurance.
- Force insurance companies to cover pre-existing conditions, with some controls designed to prevent people from dropping insurance to save money and coming back in to gain coverage for serious medical conditions. This would essentially create a national "group," which reduces the value of employer-provided coverage and increases the value of indivudal coverage.
- Institute an "individual mandate," similar to the individual mandate for auto insurance in many states. Individuals would have to carry insurance or pay an income tax penalty. (Do not, on the other hand, institute and employer mandate.)
- Emphasize catastrophic/Health Savings Account insurance at reasonable rates. These plans are cheaper because they are true insurance plans, protecting against catastrophe, instead of pretending to cover all health issues. Their high deductibles force individuals to either get gap insurance (an option), to shop around, or just to be more responsible for their own basic maintenance.
If Congress Fails to Pass a Health Plan ...
It's already happening. Employer provided health insurance is just too expensive. Small businesses haven't been able to afford it for a long time. They pay high rates--double, we discovered when we were in business--what you can buy as an individual. And the rates have been going up dramatically every year. If you think large corporations are going to be able to continue providing coverage, think again. Chrysler and General Motors went into bankruptcy, largely because of huge legacy costs generated by their commitments to worker/retiree pensions and health care.
Even when companies continue to offer health insurance, workers and would-be workers are at risk, especially older workers too young for medicare. If you're 50 to 65, watch out. You'll be first in line to be laid off and last in line to be hired--precisely because you are too expensive to be covered.
While this is painful, it may not be entirely bad in the long run. Our reliance on "benefits" has had some unfortunate consequences.
- Workers are insulated from medical costs: With health insurance provided for them, workers have no incentive to pay attention to medical costs and every reason to demand the latest and the best medicine has to offer.
- Medical providers are insulated from price pressure: With workers not paying attention, medical providers are free to ratchet up charges, pad invoices, order unnecessary tests, by expensive equipment duplicated in nearby facilities, and so on.
- Insurance companies are insulated from price pressure (sort of): To some extent, insurance companies benefit from the same absence of price pressure as providers. However, insurers are really middle men who pass on the costs in the form of insurance to companies and individuals.
Employer provided health insurance has other consequences.
- People think employers must provide health insurance. Why? Do employers provide auto insurance? Or home insurance? Or long-term care insurance? Why is it their business? Why is a good thing? Does it make a business a better business? Does it help a company serve its mission? Does it make a company more competitive, especially in the global market where health insurance is either not provided at all or provided by the government?
- People think they must work for a company that provides health insurance. In setting this as a priority, they often wind up working for a company they don't like in other respects doing work they hate, and generally limiting their options.
In another post, we'll talk about what we might do instead. Wile E.