The Water’s Fine in a Single Health Care Insurance Pool
Yet another delay in the implementation of the Affordable Care Act (ACA): Medium-sized businesses, those with 50 to 99 workers, will get another year’s grace period before they must offer health insurance to their employees.
In July, the White House pushed the start date for small businesses with fewer than 50 workers to 2015.
Here’s a question: With all the negative press about Obamacare, from both the Right and the Left, why has there been virtually no serious discussion about the benefits of decoupling health insurance from employment once and for all?
Historically, post World War II wage controls prompted the rise of employer-sponsored health coverage. Not considered part of wages by the IRS, health care and sick leave were offered as so-called “fringe benefits” to attract workers. Employees didn’t have to pay taxes on these benefits; their employers got tax write-offs – a win/win at the time.
That was then, and a lot has changed since the 1940’s. These changes predate the ACA:
Few, if any, Americans graduating from college since the 1990’s can count on more than a few years of employment with one company, let alone the lifetime employment that their grandfathers and perhaps some of their fathers enjoyed.
According to the Bureau of Labor and Statistics, the average worker in this country will job-hop 15 to 20 times before retirement!
At the same time that employment has become less stable, healthcare costs have outpaced inflation. Large companies with entrenched healthcare benefits departments, a huge administrative cost, have been reconfiguring health care policies for decades, looking to trim expenses.
Often the results are less comprehensive health plans and/or higher deductibles and co-pays. Many employers, big and small, choose to hire temporary rather than full time workers to eliminate the need to provide health care insurance at all. They argue (rightly) that they now have to compete with companies around the world that don’t foot the bill for their employees’ health care.
All of this has occurred as the power of unions to protect worker wages and benefits has declined.
Because 60 percent of Americans still get health insurance through their employers, however inadequate it may be, self-employed and temporary workers do not have the same purchasing power in the marketplace. Their premiums are much higher for the same coverage. Of course, that is assuming that they could even get a policy, since the pre-ACA world’s insurance company usually denied any health related issue considered to be a pre-existing condition.
In a 2009 New York Times op ed, Princeton economist Uwe Reinhardt said: “Ask any group of health policy experts whether they would have put in place our employment-based health insurance system, had they had the luxury of designing our health system from scratch, the resounding answer most likely would be ‘No.’”
One alternative he suggested in another op-ed was rolling back the Medicare eligibility age to allow Americans younger than 65 to buy into the program.
Unfortunately, insurance companies, fearing the potential loss of huge numbers of customers exposed to a more efficient system like Medicare, successfully lobbied Congress. The result: leading Democrats like Max Baucus and Harry Reid, who claimed to favor a public option ultimately closed off any discussion of even this limited approach. The Right, ostensibly champions of capitalism and free markets, successfully demonized a true public option by labeling it “Socialism”.
The current system is anything but a free market model. Within most states today, only a very small number of huge insurers dominate. This means that the 40 percent of people not covered by their employers have less bargaining power and fewer options when purchasing healthcare on their own.
In a recent analysis, the American Medical Association (AMA) found that in 71 percent of local markets across America, a single insurance company controlled half or more of those markets.
According to the Robert Wood Johnson Foundation, more than half the people who purchase individual insurance policies in 30 states are limited to a single insurance company.
Some argue that large monopolies are not inherently bad if they are able to negotiate lower premiums. Others, like the AMA, cite national studies showing that when insurance companies merge and acquire smaller companies, their profits and premiums go up.
Even if some monopolies do deliver lower premiums, isn’t the cornerstone of capitalism anti-monopoly, pro-competition?
Doesn’t it make more sense to put everyone in the same insurance pool? That would create a truly competitive health insurance environment. Insurance companies then would all be vying for the individual consumer, forcing transparency and driving costs down.
Freed from covering healthcare for their workers, employers could compete in the global marketplace. Employees who joined their companies would do so because they wanted to be there, not because health benefits were offered. Others might choose to become their own bosses, spurring a renewed growth of entrepreneurs and future job creators. A win/win for capitalism.
So, given the newest delay in the employer mandate, and given the fact that the Right, anxious to repeal Obamacare once and for all, wants to extend this delay to individuals in the name of “fairness”, perhaps the time is ripe to have a serious national discussion about really reforming the healthcare system by starting with elimination of employer-based healthcare.
About Deborah Shlian
3 comments on “The Water’s Fine in a Single Health Care Insurance Pool”
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Deborah Shlian
Jane Moss
John Ling
kennatoney
LPB
Brian Ross
truth-2-Power 
Year ago, I ran a small hotel and restaurant supply company with five employees and the insurance ate up a huge chunk of our profits … and my time. It would’ve so much easier to simply pay our employees and let them seek the right insurance for them, which presumably would be available under a single pay system.
Apropos my assertion that the Right now wants to delay the individual mandate, legislation has just been introduced to do just that: http://www.nola.com/politics/index.ssf/2014/02/rep_scalise_targets_affordable.html
Thank you for your ideas re a more intelligent approach to health insurance. If healthcare was no longer an employment benefit, it would definitely make American businesses more competitive. With one insurance pool for all, it is also likely to lower health care premiums through competition. I also liked your idea of lowering the age for Medicare. All your proposals seem to have the potential to improve a health care system that needs improving.