Does Employment-Based Insurance Make US Medical Care Unfair and Inefficient?

People don't realize that a lot of American industry in 1960s and 70s was "regulated monopolies" (Health care, airlines, trucking, telephone, etc). These provide a lot of the benefits that social democracy provides in Europe but was less obviously "socialized".

And similarly, the huge sea change that happened with Reagan breaking regulated industries wasn't and isn't noticed as the huge change that it was (and it is still reverberating through this society).

The thing is, health care is "natural monopoly", it's a situation where competition is meaningless at the point when a person shows up bleed at the emergency room. The process of "opening health care for competition" from the 1970s onward grew a hundred poisonous rent-seeks in every part of supply chain, from medical equipment operators to hospitals to insurance companies. Blaming just insurance companies is a bit misguided after all this. Certainly they play a part but the basic structure of private health care just naturally goes this way unless it either seriously regulated or nationalized.

[1] https://en.wikipedia.org/wiki/Blue_Cross_Blue_Shield_Associa...

For instance, if you were a billionaire maybe $1,000,000 for a coronary artery bypass operation would seem like a good deal.

Doing those operations in volume lowers the cost but it also makes it possible for doctors to get experience that makes the operations safe and effective. Studies have shown that the main factor for survival in CABG surgery is how many operations are done a year by the doctor and the clinic.

Similarly, you have to treat thousands of people to prove a drug is safe and effective. You just couldn't have advanced treatments for the ultra-rich without these treatments being developed and tested on a large volume of less wealthy people.

It is crazy that people who get their insurance from an employer get a tax break (indirectly), while those that purchase it on the individual market do not. Also, it messes up the risk pool: more affluent people who get their insurance from work are bound to be more healthier than the poor schlubs who are not affluent enough to get insurance from their job. As an insurance company, I could get away with charging group plans much less than individual plans.

Switzerland, which is basically where the heritage foundation copied what would become RomneyCare/ObamaCare from, does not allow for group plans. You simply don't get your insurance from work, everyone is shoved into the same individual plan market (with some weird probably overthought exceptions, like Post docs....). This very important aspect is missing from the ACA, but would be impossible to remove politically, full on universal healthcare is much more likely.

The bigger issue though is the impact on free market prices as the free market requires competition, but employer group plans force everyone into whoever their employer has chosen - and the employer cost selection is different from that of the employee.

It also drastically impacts the ability for people to create new businesses as getting the required standalone health insurance is exceedingly expensive - again because individual insurance purchasers are not the primary customers of health insurance companies.

At least Obamacare/ACA meant that insurance companies couldn't deny on the basis of pre-existing conditions.

I used to have a coworker that claimed all that was needed was to raise the maximum income for medicare and that would magically solved healthcare. Ignoring entirely that private health insurance companies could choose to deny coverage. My (now) wife literally was unable to get insurance - she was deny by literally every insurance company in CA because she had donated a kidney, and it turns out having a single kidney is a preexisting condition. This was despite her donating a kidney saving an insurance company money.

I would argue the lack of transparency in the marketplace and the inability for anyone to make an informed choice of hospitals or what it will cost them (the linked article seems to indicate the consumer has a choice to go to a "nice" hospital or a "not so nice" hospital, but most times we don't have the choice when we need care - it's close to our home. The times we do have the choice (sometimes for birth, cancer treatment, etc) is where you see hospitals investing heavily to get high margin services from consumers.

Does Employer-provided care make medical care unfair? One could argue that employer-provided care with the tax incentive might lead to better resources for an employed person electing that care, but any time money is involved you will likely get better care. EDIT: More succinctly - There will always be some inequality / unfairness in care because there will always be inequality of wealth. I'm not sure explicitly here that employer-provided is the problem or that any subsidized care will create this kind of inequality.

I'm not sure you can argue effectively that granting the same medical care to all as a matter of law will fly because people will always find a way to get better care if they can afford it. Does employer-provided do this at a larger scale? Maybe?

The best way to ensure fairness and efficiency is to get the data out there and available, and make healthcare more like a market instead of a black box.

It makes those people less likely to switch jobs, or start new self-employed projects of their own.

I am really surprised there aren't any online price arbitrage websites for healthcare. You could pay a few pennies to fly across the world to get competitive healthcare at a 1/10th of the cost it would be here.

I believe this is around $400/year of which around half will count as a taxable benefit. I think it’s unavoidable that there will be a market for this type of premium services, and I don’t mind. The public healthcare has to operate efficiently on cost so doctors and equipment needs to be fully utilized and patients thus need to queue. A doctor I can se within 24h doesn’t have a full schedule, so is likely an underused - and thereby a luxury - service.

Whether a healthcare system is “fair” isn’t a simple question, but whether it’s sane can be answered by a few test questions such as “can a contracting a serious medical condition eve be a financial disaster?”.

Don't get me started on them using the Mean(!!!) household GDP of $155,000. (just to clarify: using the mean here dramatically misrepresents the average American because the mean includes billionaires. the median for 2017 was $61,372)

So for the user (as opposed to the insurance company), the value of the insurance is not to on average be covered. The point is to always be ok if you get ill.

Where I'm getting at is that employment is a thing that isn't always a given. You're going to be between jobs at some point in your life, and you don't want a potential huge bill to wipe you out financially. Even if it is just for a short period, it ought to worry you that you aren't covered.

I get the feeling most of the debate just glosses over this with the average case, which is that most people are going to be just fine not being covered for a few months.

Similarly, we don't have socialized single-payer food or housing (though countries have tried that). Why do we think that is the only solution for better medical care in America?

US average household income is ~$75,000 so to pay for that as a flat tax, that would be a rate of 37%, just for health insurance.

But state/federal governments already pay for about 40% of all healthcare, and charge a good deal of taxes to pay for it. If they were paying for all healthcare it would mean adding a new 22% payroll tax to make up the difference.

Fortunately, some gains appear to be occurring to side-step the entrenched hospital provider networks. A huge number of urgent care centers have begun springing up, at least in this area, which are perfect for everyday healthcare needs. I can walk in with no appointment, pay the $25 co-pay, and see a doctor about bronchitis or poison ivy or get stitches for a minor wound or an x-ray without waiting an absurd amount of time in an overburdened emergency room, or waiting a week for my primary-care to have an open appointment. For the most part, if you tell them what is wrong, they will do what you ask.

It's more like going to get your car fixed, or taking your dog to the vet.

Then again, I'm not on a whole battery of prescription drugs, which seems to be increasingly unusual, so I don't have to deal with the hassle of going back regularly to get chronic prescriptions re-issued.

That line from the beginning just melted my face. I knew it was bad, but I didn't know it was that bad. Filing this factoid away for later!

* employer-based insurance being a 'Whole Foods'-like product best for the rich that's nonetheless been encouraged by the government, while the 'Wal Mart'-like alternative has been encumbered to the point of disappearing.

* how would we raise our $3.5T health costs if they were war reparations required of the US from a foreign conqueror?

> the contribution made by employers to the premium is exempt from the employees’ taxable income. This exemption cost the US Treasury an estimated $300 billion in 2018.

is just very disingenuous. Does the lack of an air or sunshine tax also cost them money?

Let's be clear on one thing before starting, it's just a benefit for employees, just like any other kind of benefit offered, for example the aforementioned matching 401k retirement fund. Some employers have fabulous benefit packages, and that is fine. Another related topic here is how medical insurance used to be mostly about avoiding costly emergency room visits, which back in the old days would sometimes result in bankruptcy. And, that is fine, because bankruptcy has replaced debtors prison, and we maintain a civilized society, but I digress. Insurance used to be a safety net to avoid financial ruin in the event of an emergency, but somewhere along the way it morphed into an all-invasive pervasive part of medical maintenance care, I.E. yearly dental cleanings, or primary care physical exams, etc.. Consider this, Medical insurance used to be just like automotive liability insurance, it paid out when there was an expensive accident, but auto insurance does not pay for oil changes and windshield wiper fluid. Well that is kidna what happened to medical insurance, it's morphed into a pervasive maintenance plan, and at this point the maintenance aspect is what is most defining about medical insurance. Paying that small sum of money every month is super worth it when that ultra rare accident happens requiring an emergency room visit, but this same model does not apply well when it comes to maintenance, because then you get people with pre-existing conditions who are effectively uninsurable, because this is not a Hippocratic oath, it's insurance (I.E. business) for avoiding bankruptcy by way of emergency room visit.

Still, it was an interesting perspective on insurance as an employee benefit. Not sure about the foundations, but the analogies with grocery stores was amusing.

> Emphasis is on specialty and subspecialty care, expensive technology, extra capacity to facilitate access (US hospitals have an average occupancy rate of 65% compared with an average of 76% according to the Organisation for Economic Co-operation and Development), and more and better-quality amenities, including space and privacy in the hospital.

These sorts of cross-country comparisons are really important in helping to understand why U.S. healthcare costs are so much higher. During law school, I would study at Northwestern's Womans' hospital, which was next door. It was a beautiful facility, a brand new glass-and-stone mid-rise with spectacular views: https://www.nm.org/-/media/Northwestern/Images/locations/pre.... Non-profit facilities elsewhere in the world are often quite a bit more pedestrian. (You see similar differences in university and college facilities.)

> Countries that have national health insurance come close to this solution by having a flat tax on retail sales or on value-added sales that is initially paid by business firms, but is eventually passed on to consumers.

This is an incredibly important point. In the U.S., the "health care debate" is actually two separate debates. One is about how to structure the health care system. The other is about income redistribution. While many in the U.S. want to see the U.S. have European-style medical care, there is almost no traction for proposals that would pay for it in the same way Europeans pay for their systems.

The leading proposal for universal healthcare in the U.S. right now seems to be "Medicare for All." Medicare is paid for by a 1.45% tax on income, with no cap on the taxable income base. Contrast Germany, where people are required to purchase public insurance at a cost of 15% of income (half paid by the employer), but those making above about $70,000 are exempt from the mandate and tax and permitted to buy private insurance. Or Spain, where health care is paid for out of the general fund, which in turn is heavily reliant on a 21% VAT. (If the U.S. had the same mix of income/corporate/sales taxes as Spain, income taxes would go down a trillion dollars, while sales taxes would go up two trillion dollars.)

In the U.S., replacing sales taxes with a 20% VAT--the OECD average--would raise a trillion dollars. Easily enough to pay for universal health care, and a very typical European way of paying for universal health care. Yet, there are zero serious proposals in the U.S. for such a measure.

Do we need a 200k/yr gatekeeper to basic antibiotics? Or would an experienced nurse be able to figure out the difference between bacterial and viral?

Do we need a nurse cleaning patients? Or is that a job for unskilled labor?

Government licencing has gone too far, and has created artificially low supplies of health insurance workers. This was driven by incumbent healthcare workers.

From the title was hoping to see employer-based insurance compared against better market-driven individual-based insurance.

Instead it's yet another privatized vs socialized insurance analysis. (Not that it's not interesting...was hoping for something new.)