Why is health insurance tied to employer, again? Is there a reason that should continue?
Given the mandates on insurance there are some reasons it should continue, but they are not really good reasons.
Many of those reasons are legislature that allows insurance companies to do/demand things that they really shouldn't be able to. Even if the goal isn't public healthcare, America still needs a major healthcare insurance restructuring.
Also, get it out of the employers hands - as in make it illegal to offer any benefits and let the employee get paid 100% of their salary instead. Also make it so that employers can't legally collect taxes without consent.
Just drop the rebates, and make any secondary insurance be primary. That would make sure the insured group for the public system includes the healthy rich (which makes the pool for those that actually need and can't afford their health).
This is sort of a hot take, but there are plenty of examples of things like this in the US that have the unstated parenthetical "(because poor and minority populations were ignored by the system completely)"
We may need more wealth transfers to the needy so that they can pay for healthcare! You will note, however, that the recent approach to reforms, which tried to turn the vehicle of “insurance” itself into such a wealth transfer, has not exactly solved the problem!! Nor has it achieved its stated goal of making healthcare and health insurance more affordable to the general population, a mission always contradictory to its goal of being a wealth transfer!
Besides the fact that there doesn't seem to be any better or viable alternative available in the marketplace what are the other reasons?
Before someone says "but the healthcare marketplace", it's a joke. The individual plans we have today are ridiculously expensive because: A) the government will pay for folks who can't pay for them, so easy money for the insurance companies and B) the folks who can pay really need it (healthcare is inelastic), they're so few though so there really is no downward price pressure to compete for them.
This depends on your state. Some states, like Wisconsin, won't offer medicaid for income reasons alone. I'm unaware of health insurance policies being cheaper in Wisconsin, though perhaps it's the case.
Employer’s cost per employee is much much lower than an employee’s cost directly from insurer. The employer “sells” the benefit to the employee at a higher perceived cost because of this.
Without an employer’s discount, an employee simply cannot get the same insurance coverage.
Thus, the employee agrees to working pay and conditions which would not be agreeable without the pressure to get health coverage.
Hence, lower cost of labor to the employer and pressure to keep the current structure in place.
Serious question, right now it’s legally mandated to have. What would happen to medical prices if that requirement was reversed?
Just food for thought. If you model it you’ll find interesting results.
If it was illegal to pool health prices via insurance (instead of just not legally mandated for everyone to be insured) then the effect would be that those who went bankrupt under the old system would instead be dead.
And for pre-existing conditions and long term health disabilities - the individual would need to somehow justify the profitability of their existence to a private underwriter who was willing to bear the cost - in most cases those people "aren't worth the cost of keeping them alive" (assuming you're looking strictly at numbers).
Hence - a lot of people would end up dead.
No one would sell insurance that would fix your already destroyed roof.
But they will sell you homeowners insurance in areas prone to wildfires or hurricanes. The difference is that you are expected to know the amortized cost of disasters for your property and either insure against it or simply accept the risk. Either way, you as a homeowner are supposed to make an informed decision. If disaster is too likely to occur in a certain area, you can either move or not purchase a property in the first place.
Science still hasn't figured out how to let us move into healthier bodies or choose our bodies prior to birth, so, alas, we are forced to seek fairness through other means.
And in areas with wild fires, tar roofs aren't legal for new construction! Roofs have to be built out of something non-flammable.
Lessons to be learned perhaps.
If you want to know why doors in public places have to open toward the outside in modern countries and why "panic bars" are often mandatory, the answer is large piles of dead children (literally). Depending on who you ask and the country they live in, they will refer to a different disaster, but the common element in all of them is 70 - 600 people stuck in hallways unable to escape due to bad exit designs (eg. people piling up against doors that open towards the inside).
You can virtually ramp up building codes ad-infinitum, until the house is as safe as can humanly be built, if your expense is to hurt a lot of children by bankrupting families of expenses to take care of other necessities in life.
I think it's more a question of whether we'd be willing to install and maintain a roof on a building that had been designed without a roof in mind or whether we'd tear down the building to make room for a new one. You'd probably rationally lean in the second direction for a house - but when we're talking about a human life the math changes for a lot of people.
Either way, a return to an insurance-less situation would leave people with preexisting situations out in the cold, unless your definition of insuranceless involves government subsidies for all preexisting conditions and at that point you're basically talking about medicare for all.
In my mind, it's not charity because it's
- For everyone. Maybe not for you today, but maybe tomorrow
- For the benefit of society as a whole. If we let everyone who got sick just die, our society would be worse for it.
If you are thinking of something that is for literally anyone, you are most likely thinking of universal healthcare or some other like system.
We've seen how the judgement of those receiving aid has affected US policy in the past - a handful of people are marked out as undeserving of the aid (maybe someone with a long term physical disability commits murder or something else) and then the full category of people are painted with suspicion (ala "welfare queens") and that suspicion is used as a justification to cut spending drastically under the guise of oversight. There are a fair number of people clamoring today for UBI for the reason, in my view at least, that it's the only way to undo all the complicated conditions on various forms of governmental aid.
I'd personally be quite in favor of keeping it dry, cold and governmental - healthcare is, IMO, an important enough topic that we can't let emotions override treatment. If we're going to put a bunch of money into a big pot we should have some very deliberate rules about how that money comes out and what it gets used for and posing it as a charity is going to get all sorts of rules applied to it (i.e. it can't be used for anything Planned Parenthood related, it can't be used for contraception, it can't be used by trans identifying individuals, you need to have a full time job to access it, it is unavailable to felons, etc...) - some of those rules might make sense, others might not. At the end of the day I think posing it as a charity will make it a lot harder to come up with a fair set of restrictions on it.
There's also the Chinese model, where you or your family are expected to have substantial cash savings on hand for any medical emergencies.
My uncle spent $1.7 million in 3 years to care for my aunt, and that is with excellent insurance.
My mom is fighting cancer and her medication is better than 25K a month, but she pays 200. That’s closer to my definition of good insurance.
The people who went bankrupt before were generally those without insurance. You've not said anything that explains to me why they wouldn't do the same under this supposed new system.
I think I laid that out pretty clearly in the prior comment, is there some part of it that's unclear?
I feel like we’re talking past each other. Sorry if I’m being dense.
Yes, emergency care has been essentially free in the US for those who can never pay for it, but that doesn't cover, say, chemotherapy. If you don't have insurance and don't have any way to generate significant cash (no house to sell and no wealthy generous friends) it's not that you're going to get chemo and it'll bankrupt you; you just won't get chemo at all (and you'll probably die). This is a little better now with the medicaid expansion, but not perfect, and not all states expanded medicaid.
Even today we have people dying of complications related to diabetes -- a serious but very treatable affliction -- because they can't afford supplies. In the US! The world's richest country!
While everyone in America can receive emergency treatment no questions asked it isn't necessarily going to happen very quickly and can result in more health issues than being able to pursue medical care through more standard means.
It wasn’t great. HMOs were being introduced (top down) and a lot of people had no idea how to use them.
The prices were nowhere near as high. The huge jump happened in the 2000s. It was nuts.
Regarding the bit about “health insurance companies could reject preexisting conditions” - most people got insurance through employers whose contracts required pre existing conditions be covered.
There were absolutely some places you could get totally stuck and screwed.
But things didn’t get bad until the 2000s, and it was mostly price that was the issue.
No, we won't. The results are entirely predictable. Without medical insurance people die and/or go bankrupt.
The main problem is that most Americans for some reason cannot imagine a system other than the US system, and equate all medical insurance with that.
My understanding of the mandate was that(theoretically) by more people being insured the population be healthier and that would someone how drive prices down. Obviously that's a farce as prices go up year over year. It would be interesting to see how much more basic procedures would be now after being adjusted for inflation compared to what they were in say the 90's.
Why have health insurance at all? It's just a middle-man for profit scheme between patient and health care.
Just have mandated health CARE for all and do away with health insurance altogether. Lots of companies would lose billions, but average people on the street would be the ones not spending that money.
> During World War II, wage and price controls prevented employers from using wages to compete for scarce labor. Under the 1942 Stabilization Act, Congress limited the wage increases that could be offered by firms, but permitted the adoption of employee insurance plans. In this way, health benefit packages offered one means of securing workers.
> In the 1940s, two major rulings also reinforced the foundation of the employer-provided health insurance system. First, in 1945 the War Labor Board ruled that employers could not modify or cancel group insurance plans during the contract period. Then, in 1949, the National Labor Relations Board ruled in a dispute between the Inland Steel Co. and the United Steelworkers Union that the term "wages" included pension and insurance benefits. Therefore, when negotiating for wages, the union was allowed to negotiate benefit packages on behalf of workers as well. This ruling, affirmed later by the U.S. Supreme Court, further reinforced the employment-based system.
- Health Insurance in the United States, Melissa Thomasson, Miami University (https://web.archive.org/web/20110903053358/http://eh.net/enc...)
> if anything, employer-based health insurance strengthened the unions' ability to negotiate for their workers.
In what way does having more that needs to be negotiated strengthen unions? You've heard the punchline without hearing the joke: why were unions prevented from negotiating pension and insurance benefits before 1949?
If you reversed the original sin of sheltering wages paid in the form of health insurance from taxes, you'd see stronger unions the next day. The biggest battle fought during the ACA war was about the possible taxation of "Cadillac" health plans, and ACA lost.
edit:
Strike wave of 1945–1946
https://en.wikipedia.org/wiki/Strike_wave_of_1945%E2%80%9319...
Taft-Hartley Act
https://en.wikipedia.org/wiki/Taft%E2%80%93Hartley_Act
Exclusive Union Control of Pension Funds: Taft-Hartley's Ill-Considered Prohibition [PDF]
https://scholarship.law.upenn.edu/cgi/viewcontent.cgi?articl...
It incentivized employers to compensate with benefits, not cash.
Around the same time, unionization became much more popular, and with it negotiated compensation (more benefits).
These were big issues in the North. In the South, the economy has was still largely rural, and many states provided publicly funded hospitals - so the dynamics were different.
There was a move for employers in to provide health insurance pre Great Depression. That was because larger employers could use their size to negotiate deals with hospitals. So health coverage was worth $individualPrice to an employer, but $negotiatedPrice to the employer.
In general, insurance providers preferred going through employers because employed people are healthier and file fewer claims.
Geico was an acronym for “Government Employees Insurance Corporation” which was a thing because government employees were a pretty safe bunch to insure.
So even back then, many of the dynamics we see now existed: negotiated prices, grouping, etc.
Do you want our health insurance plan, or an extra $1500/month to find your own on the open market would be an interesting way of looking at it.
But either way, both your employer and your cost for health insurance should show up on everyone's pay statements. Most have no idea what their employer pays for insurance.
From there, insurance would likely break down into high cost / high coverage, mid cost / mid coverage, low cost / legally mandated minimum coverage.
The poor would end up with the low cost / minimum coverage plans as cost would likely end up being the main motivating factor. Given that 6-in-10 Americans can not afford an unexpected $500 bill (https://www.cbs19news.com/story/34248451/6-in-10-americans-d...), this would likely be the coverage level chosen by about half of Americans. These policies would be affordable, but I expect the deductibles and co-pays would be high enough to make it prohibitively expensive for policy holders to actually get much utility from them.
The other half would end up with the better plans, unless they were more comfortable with risk and elected for the cheaper plans. Their lot is probably pretty similar to today.
Americans can afford a $500 expense just fine. The median American household has ~$1000/month left over after all ordinary living expenses, per the US Bureau of Labor and Statistics.
I think they're drawing on this series of studies: https://www.bankrate.com/banking/savings/survey-how-american...
Start from the well-sourced fact that median American households have ~$1000 per month to spend without sacrificing anything, and work from there. This can't be true at the same time all of those breathless headlines about broke Americans is also true. Without fail, if you dig into the details, the headlines are grossly misleading. The percentage of Americans that truly have no capacity to deal with significant unplanned expenses -- per Federal Reserve studies -- is 10-15%. A not inconsiderable number of people but far less than implied by the clickbait.
Average Americans have extraordinary amounts of discretionary income compared to almost anywhere else in the world. Americans both have a low savings rate and they have large amounts of money available to save.
Like if your contribution to your insurance is a few hundred a paycheck there is a pretty good chance that the employer is paying in quite a bit more than that.
https://www.kff.org/health-costs/report/2021-employer-health...
In most cases there is not an avenue to recover any lost compensation if you opt out of health insurance. If an employer offered a higher base pay for those not on their insurance plan, you probably WOULD see a much higher rate of those securing their own plans in the open market.
A more rational phrasing may be: "I can buy insurance isolated from my employment, but I am priveleged to have the benefit and OPTION of taking advantage of employer benefits."
If i am freeing the employer of that burden....should that not reflect back on my compensation? Surely you dont mean the employer should then be able to save more and basically lower their compensation for employees and expect the same return?
There are plenty of packages on the open market that are generally better than what an employer offers. But you are essentially making extra sacrifices by opting out with no benefit to you and all the benefit of the company.
It would make more sense for a company to even offer a HSA where they contribute as much as they would to a plan to a savings account and allow the employee to also contribute their share pre-tax. And apply that to plans available on the open market.
>It would make more sense for a company to even offer a HSA where they contribute as much as they would to a plan to a savings account and allow the employee to also contribute their share pre-tax. And apply that to plans available on the open market.
Agreed
Because Democrats’ plans for universal healthcare rely on forcing employers to pay for it.