Employer-provided health insurance is one of the worst things to emerge from the US in the past... what? 70 years? It gives far too much power in the marketplace to employers and very little to the actual users of the insurance - the insured.
Why don't employers provide auto insurance too? They'd get a much better deal via group rates, and we'd be 'better off' because we'd all 'pay less' for auto insurance, right?
The idea of 'benefits' in general being 'expected' from employers is, in itself, a bit crazy - just pay people well, and let them make their own decisions. I'd have thought 'free market' supporters would be all over that concept. Company 401K plans? Generally limit you to high-fee and substandard mutual fund options. Company health insurance plans? One or two options, not something which always fit people very well.
Employer funds in to an employee-controlled HSA was/is a decent middle ground, but HSAs in general seem like they're going to be going away or more limited in availability in the next few years under the Affordable Care Act, which is a real shame.
gives far too much power in the marketplace to employers
Having been on the employer side, it also puts distortions on their decision making. Some examples I had to deal with…
• You have an employee who is not working out, you aren't happy with his work, he has been unable to improve, and he isn't particularly happy failing day in and day out either, you'd like to terminate his employment, but you also know he has a dependent with mind bogglingly expensive health care issues that will take long term treatment and won't be eligible for coverage anywhere else because they are now pre-existing conditions. (Also know that whatever that dependent costs is going to get added to your next year's "insurance" premium in the negotiations.)
• You hire a guy that has been an independent consultant around town for many years. A few months later he needs expensive heart surgery, so you carry him for a while during recovery (and pay for all the health bills in next years "insurance" negotiation), after which time he stops producing work until you figure it out and fire him. He then goes back to his independent consulting work after using you for an expensive surgery and recovery. Now, remember that the next time you think about hiring a pudgy 40 year old man who currently does not have insurance.
Excellent point. Leaving insurance decisions to the individual would take these issues out of your hands, and let you operate more efficiently. And to elaborate on the employee side, employees wouldn't have to feel so tied down to particular employment situations simply because of health issues.
Insurance is fundamentally a group activity --it is a shared risk pool. There is no such thing as individual insurance. The question is how groups are formed. Currently, US does it around business units. UK does nationwide.
Good point. Using those terms, doing it around business units seems to be more harmful than doing it around an entire nation (or even just a state). Tying to a business/company means people themselves are artificially tied to a particular company when they might be better suited (talent/skills/lifeneeds) to be at a different company.
We get our health care through insurance companies in the US because wages and prices were government controlled during and just after WWII. The labor market was very tight during the war, and during the expansion after. The govt declared that health insurance wasn't wages, so employers were able to compete for workers with health insurance.
As a result, today, the only practical way to get health insurance in the US for most people is through an employer's health insurance company. Which makes for a more inefficient labor market, since it's harder for people to change jobs and be sure of needed coverage. Sucks to be us.
As for whether an employer should offer health insurance: it's like tipping in restaurants. You may not like the tipping system in the US, but that is the system we have, so if you don't want to tip the person working for you for the duration of your meal, don't go in the restaurant. As an employer, if you don't want to offer health insurance to your employees for the duration that they work for you, don't go into business. Differences in scale, complexity and starting a business issues notwithstanding.
"The govt declared that health insurance wasn't wages"
And at some point they likely will reverse that, and premiums will be counted as wages (or at least taxable), and we'll be stuck with an even worse situation.
Well, that and not allowing competition between hospitals[1]. And remunerating doctors based on the labor theory of value[2]. But Employer-provided health insurance is certainly in the top 3. Given those, I'm sort of amazed that our healthcare system works so well, with us only spending twice as much to achieve similar health outcomes to other countries.
[2]http://www.slate.com/articles/news_and_politics/prescription... I believe that the reason that insurance companies followed suit is that hospitals can't offer lower rates to anyone than the offer to Medicare, the same reason free birth control to college students disappeared.
Why don't employers provide auto insurance too? They'd get a much better deal via group rates, and we'd be 'better off' because we'd all 'pay less' for auto insurance, right?
Would we pay lower rates? Auto insurance is mandatory if you want to drive. Everyone has it (well a very high percentage of drivers). There's a relatively competitive market for auto insurance. I'm not sure moving it to employers would change things all that much.
I do think that employer provided health insurance is odd, but I don't think the alternative is "free market". We have to incentivize healthy people to get insurance too, just as we have good drivers that get auto insurance. It seems like we need to make health insurance mandatory or move to universal health care. Neither are very likely in my lifetime.
Also most employers give employees the option to opt out of health insurance, and you get some amount of the money back as additional pay. Virtually no one takes this option.
>Auto insurance is mandatory if you want to drive.
No, it isn't. Unlike almost every other state, New Hampshire does not automatically require motorists to carry an auto liability insurance policy or provide some of financial backing in order to drive a vehicle within its boundaries.
I think HSAs are overrated. My biggest problem purchasing healthcare isn't that I can't scrape up the funds, it's that as an uninsured individual I'm charged a much higher price for services than the insurance companies will pay. So $1000 of my money in an HSA doesn't go as far as $1000 from Kaiser Permenante. Not nearly as far.
They sort of go hand-in-hand. Right now I've got a Blue Cross plan with an HSA. I pay for the majority of stuff from the HSA, but I'm generally paying a 'Blue Cross negotiated' rate for things.
While I agree that benefits tied to employment, rather than the individual, is a very big problem, it is also the only economical path currently for medical insurance. Scale and contracts that a company can negotiate aren't there for individuals. Every year for the last decade, you hear about insurance companies raising individual and small business rates.
For profit companies managing what ostensibly a shared risk pool is another bone of contention for me. I can't find the actual reference at the moment (typing on iPhone) but legislation has been put in place requiring minimum percentages of premiums that must be spent on coverage rather than "overhead".
Also, a minor nit, not all companies offer up bad 401k plans. As an early employee at a couple of startups, I've helped hr pick the better options given rather than the first one peddled.
This is a social and financial engineering problem - change the tax structure to encourage people to get private insurance. Make the cost of private insurance 150% deductible for one year, then 140% deductible the second year, etc. for 5 years to encourage more people to do it. As more people have private insurance vs employer provided, the market economics would shift.
Sure, not all companies offer bad 401k plans. Enough do that it's not something that we should continue to encourage though - pay people more and let them make their own decisions. That money for 'benefits' isn't freely coming from nowhere - it's the cost of employing you, and it could just as easily go in to your pocket vs the pockets of plan administrators that you didn't get to choose.
>benefits tied to employment [...] is also the only economical path currently for medical insurance.
It's the least economical path ever come up with for the financing of health care. No one has ever come up with a more expensive way. All other ways that have ever been implemented have been cheaper.
One issue is that the govt can relativelt easily ban you from driving without insurance. banning you from existing without health insurance is harder. ACA oa trying, though (by forcing coverage, not by killing people)
Why don't employers provide auto insurance too? They'd get a much better deal via group rates, and we'd be 'better off' because we'd all 'pay less' for auto insurance, right?
The idea of 'benefits' in general being 'expected' from employers is, in itself, a bit crazy - just pay people well, and let them make their own decisions. I'd have thought 'free market' supporters would be all over that concept. Company 401K plans? Generally limit you to high-fee and substandard mutual fund options. Company health insurance plans? One or two options, not something which always fit people very well.
Employer funds in to an employee-controlled HSA was/is a decent middle ground, but HSAs in general seem like they're going to be going away or more limited in availability in the next few years under the Affordable Care Act, which is a real shame.