If the free market was supposed to handle the distortion of employer benefit programs, then every employee would need to monitor their employer's yearly benefit negotiations such that 10-20% of them would be giving notice on the basis of any negative benefit change. That isn't happening.
Also - a lot of these benefits are things we'd generally consider "necessary" - if that's the case why would we open the door wider to allowing folks to continue being paid 7.25/hr and now not even have a chance at ever seeing a doctor?
Or, if that money is personally controlled is it going to be secured against debt repayment? Will individuals have a guaranteed right to pay for medical care before any paycheck garnishing?
If everyone under 30 says “I won’t shell out for private insurance, and if something catastrophic happens, fuck it, I’ll declare bankruptcy”, the system falls apart for everyone. Unpopular as it is, this is the logic behind the ACA mandate.
It’s a terrible outcome, unless you’re rich enough not to care about insurance to begin with. You get coverage that’s unaffordable for higher risk people who need it, and uninsured “healthy” people one stroke of bad luck away from disaster.
You do need low-risk people in the pool if you want low-risk people to subsidize the insurance premiums of high-risk people. That is not insurance, that is just socializing the premiums of high-risk individuals. These distinctions matter when discussing policy. Socializing medical costs may be the appropriate policy choice but lets not smuggle it in by abusing a term of art like “insurance” which means something very different.
If you want to move away from that to “just pay me the equivalent comp directly and I’ll get my own insurance”, rates are going to get ugly.
Which, in the case of an universal service, is also the insured.
Would be happy with a government run plan, too, just want our government to make some attempt to address the problem, whether from the left or the right.
Healthcare being a fundamental right, this fails by not ensuring people with rare conditions get it.
Swiss American here. It's not insane [1]. The state of healthcare in America is so poor, I would caution us from referring to anything as insane without empirical evidence.
The US already implemented tax penalties on no-coverage and could adapt them to be auto-enrollement in basic coverage at a high deductible.
I have nothing against single payer, but I don't think it is worth fighting for the details of it in the US system when it can be emulated like it is in Switzerland.
(But for pricing to be fair, the more important problem in to reverse the incentive for removing lower risk individuals into group plans and make sure everyone is considering the actual price of their insurance.)
Pretty slick website too.
Oh, and the Individual insurance market predates the ACA and healthcare.gov - it was much harder to navigate before the ACA due to the pre-condition exclusions but there were a variety of plans on offer to individuals.
The only problems I know of in the individual market are due to the fact that so many healthy lives are locked up in the government/small/large business group plans. If everyone, and I mean everyone was dumped onto the market, then there would be sufficient healthy lives to balance the whole situation. Basically, it would be the same as taxpayer funded healthcare, except you get to choose your insurance company.
>Oh, and the Individual insurance market predates the ACA and healthcare.gov - it was much harder to navigate before the ACA due to the pre-condition exclusions but there were a variety of plans on offer to individuals.
The individual market pre-ACA and the one that exists now are completely different. It's actually possible to compare different insurances in the one that exists post ACA due to standardization and certain stipulations for being ACA compliant.
Well, that and the fact that many young individuals who don't have health issues, aren't making much money, and aren't covered by employer plans are often opting out of paying $7K/yr or whatever for health care.
Also, bronze level health insurance is closer to $300 per month for young people, or $3,600 per year.
https://www.nj.gov/dobi/division_insurance/ihcseh/ihcrates20...
Of course, the deductible is massive but it’s the same with any employer sponsored bronze plan, just like a healthcare.gov bronze plan.
I would prefer if group retirement plans had more flexibility on in/out flow and had to legitimately compete with the open market.
Is this like “defund the police” where we aren’t trying I actually defund them?
That’s kot cost per head covered. That’s dividing government health spending by the US population.
The US pays enough in taxes to provide great healthcare to every citizen. It chooses not to.
We already have Medicaid for people who are chronically poor.
It’s possible to decouple healthcare from a specific employer without moving to single payer or similar. I often like to point to Germany to show there is are much more varied solutions that can be tried than people are likely to say.
Conflating all these different ideas makes it harder to find an optimal solution, IMO.
Single bidder though. A reverse dutch auction in each market region for qualified providers to offer services, and if the price in that market isn't desired then short term bring in the military docs, and longer term fund the education of more doctors with the provision that they resettle among the target areas needing coverage.
If you are happy with cash salary + (what benefits cost the company ) rather than the bigger cash salary + (nominal value of benefits) then this can work, but you have also be happy with the idea that some of the benefits you are used to become less (or un) affordable to you.
What you were able to do with that cash is a separate issue. Over time it could become better, sure.
Doing it at the company level doesn't make sense. Companies with larger sizes have better leverage under this model.
Would the purchasing power be greater at the state level or federal level?
On the other hand, my personal finances are pretty easily managed through much better apps and services I selected myself.
If I just received cash compensation, I could manage my own finances much more easily.
Collective bargaining comes with a lot of benefits - doing it at the employer level is just extremely unfortunate for jobless persons.
I think the biggest problems with employer-provided benefits come at the 'employment transients' (i.e. the time just after leaving jobs and while getting new ones).
There’s tons of near zero cost investment options from Vanguard/Schwab/Fidelity, you can go to healthcare.gov for health insurance, and you can go to term4sale for life insurance, etc, etc.
The only difference nowadays is that employers large enough to do non discrimination testing and handle the paperwork have an unfair advantage over small business and individuals by being able to compensate people with tax free benefits, whereas small business and individuals can’t.
When shopping for individual insurance you're trying to balance a lot of future unknowns - will you puncture your kidney in the next year and need dialysis? How likely is it and how much is 50% POC (Price of Charge) coverage worth to you? Are you going to need an oncological drug due to a sudden cancer diagnosis - those can easily run into the hundreds of thousands of dollars a month - I hope you don't accidentally choose an insurance that covers treatment for all variants of cancer except the one you need treated.
The health insurance market is insanely opaque and most employers pick a reasonable plan and, when that plan inevitably refuses to cover a necessary procedure for their employee - they bitch and moan at the company over the phone and leverage their collective bargaining. There are also some really good reasons that the ACA didn't extend the individual market as a replacement for medicare since those insanely expensive and obscure treatments get more likely as you age.
Right now we're sorta surviving on insurance supplemented by go-fund-me and good will but that's a terrible system. Sudden insane health expenses can happen to you - I hope they don't, I wish they didn't happen to anyone - but our current system treats most folks decently well and really screws over a select few, and not due to any particularly stupid decisions on their part in most cases.
HR people can only get numbers from a small number of insurers after an excessive amount of time and have leverage as weak as someone buying a new car.
If the precise definition of the product is dictated by the government then what differentiation are the insurers actually providing that adds value to the equation. Right now insurers actually do do a fair amount of good work trying to assess treatment efficacy and ensure that their customers get the best outcomes within a reasonable budget. If coverage is standardized then they're just acting as a pool of money - cash goes in, it comes out, occasionally one of the pools will go bankrupt and catastrophe will befall a lot of folks - or else the government will step in and save it so... why not just let the government run it?
Insurer's roles would be marginalized to competing on doing just enough administration and estimating/negotiating cost/pricing.. They also would still have incentives to cut costs as they get temporary benefits of cost cutting until copied by the other insurers. It's not a lot but it is areas medicare has problems with (and pricing would get harder still without a reference private market) and retaining a private layer is more compatible with the politics of the US even when it is a pure cost.
There are places where the free market is fantastic, but emergency services, like the fire department, police services and health care, seem odd places for nongovernmental intervention. Emergency services, foreign relations, trade, taxation and border disputes are what the government signed up for and they seem the least functional at the first two. 60% is a pretty non functional average.
The only thing ACA compliant health insurance can price health insurance is on age, and even that is set so the oldest person's premiums can only be 3x a 21 year old's premiums. I.e. health insurers are made to force younger and/or healthier people to subsidize older and/or unhealthier people.
Employers (ie a group of employees) go through a broker to get benefits. The broker (ie a group of employers) goes to insurance carriers to get good prices for benefits. There is power in numbers.
In principle I completely agree with you, it drives me nuts to change my benefits every time I change my employment, but it would take a while for the "invisible hand" to do its job. If tomorrow, employers start giving employees the cash they spend on benefits, there would be a massive gap in premium that employees would need to cover.
It’s an accident of US labor rights history that benefits are so tightly coupled to the employer; most other developed countries don’t do it like this and get more favorable prices for similar coverage quality.
If you are a 1099/gig worker and file your taxes with a schedule C, you’re almost certainly eligible for a SEP-IRA (1). This is way better than a 401k; you can contribute up to 25% of your income (max $57k per year) pretax with all the same investment options as any other retirement plan. Sure, it could be made easier to setup, but it’s been around forever and works. What we need to do is say that if you have an employer who does not provide a [baseline] retirement plan, you are eligible for the SEP-IRA on all income from that employer.
The Covid-19 relief legislation established unemployment assistance for 1099/gig workers with federal backing and administered by the states. This should be kept around, improved, and made sustainable (add a line to the Schedule SE for paying the same kind of unemployment taxes that businesses pay on behalf of employees).
Obamacare allowed for association-based health plans and the Trump administration approved one of them. I don’t recall the details or the current status, but that’s a start in the right direction. Employers pay a lot of money for health plans and their size allows them to negotiate better deals. We need that leverage outside of employers and plenty of other improvements, but at least we have the basics.
This is achievable!
(1) https://www.irs.gov/retirement-plans/retirement-plans-faqs-r...
Most people live bill to bill, probably more-so those less advantaged.
How many would really be able and or willing to save like that?
Isn't the more simple answer getting rid of this crazy system and profit incentives by nationalizing healthcare?
H. L. Mencken
Edit: The problem is "lack of political will," i.e.. lack of people or corporations willing to hire lobbyists to make it happen.
Edit 2: While we're at it, why not just let everybody make Roth contributions, at least up to the amount one could contribute to an IRA? Let's just get rid of the whole "backdoor Roth" shenanigans and let people contribute directly.
The problems is the various defined contribution schemes were never introduced in a systematic way as you say. 401(k)'s history is particularly unplanned.
To your point about backdoor Roth shenanigans, they aren't really shenanigans, they are legit and IRS-sanctioned. Shenanigans kind of implies you're doing something morally questionable.
The whole insurance system in the US is best described as a real-life re-enactment of The Trial by Franz Kafka.
[1] By not really insurance, I mean that most people with it (especially older people) may consider it a nice perk but it doesn't really protect them from out-of-pockets they can't afford.
Not if your spouse works for an employer that offers a 401k.
Do you have a citation for this?
I'll offer a citation from the IRS that strongly suggests (though does not 100% prove) this is not the case:
"Can I set up a SEP for my self-employment income if I participate in my employer's retirement plan?
Yes, you can set up a SEP for your self-employed business even if you participate in your employer's retirement plan at a second job."
That suggests that you can contribute to a SEP even if you yourself are participating in a 401K, let alone if your spouse is merely offered one.
[0] https://www.irs.gov/retirement-plans/retirement-plans-faqs-r...
https://www.irs.gov/publications/p560#en_US_2019_publink1000...
It seems only people who are employed by employers that don't offer 401k get screwed if the spouse does have a 401k and you're over certain incomes:
Perfect is the enemy of good.