Who says your employer should choose your healthcare plan?
Since World War II, the bedrock of the American health care system has been our reliance on the nation’s employers to provide health care coverage to its workers.
Senator Ron Wyden (D-Ore.) wants to know why this must continue to be the case, given that employers have a tendency to do what is best for them rather than what might be best for their employees while increasing the costs of insurance by limiting competition.
Wyden has been pitching the idea of opening up the health insurance exchanges, likely to be created in the reform effort, to all Americans – not just those who are not covered by employer plans. The Senator’s argument boils down to the idea that by freeing everyone to participate in the health care exchange, employees would be ‘liberated’ from their employer chosen health care plans and be free to shop for policies they actually want. By permitting this, we would be adding 200 million potential customers into the system, bringing choice and competition. The result – pressure on insurance providers to lower prices and innovate plans in order to compete.
What could possibly be wrong with this idea?
Yet, there have been no Congressional takers. The loss of the employer plans would be more than the private insurance companies could bear. Accordingly, they’ve directed the insurance lobby to make it very clear to their Congressional mouthpieces that the Wyden plan is, and shall likely remain, a non-starter.
Alain Enthoven, a senior fellow at the Stanford University’s Center for Health Policy, and a supporter fo Wyden’s plan, puts it best-
What makes anybody think your employer is the right entity to choose your health insurance? President Obama’s been going around saying, to my dismay, ‘If you like what you’ve got, you can keep it.’ I wish he would say, ‘If you hate your insurance company, you can switch.’ ”
Via The San Francisco Gate
It’s awfully hard to argue against the man’s point. Just because your employer provides you with health care, it doesn’t mean you’re going to like it – particularly when our largest employers operate their own self-funded, ERISA regulated health insurance plans that allow self-insured companies to behave with near impunity while severely limiting employees’ rights to do anything about it.
It’s not like it was all part of some ‘grand design’ that employers would be at the center of our health care system.
In fact, it was a pure mistake of history. During WWII, with limits placed on salaries companies could pay, employers were struggling to come up with novel ways to attract employees. That’s when they hit upon the idea of offering health care coverage as a benefit of employment. And for a long time, it all worked out pretty well.
But today, what was once a benefit used to attract employees is often a yoke around many an employee’s neck, keeping workers stuck in jobs they might otherwise leave in a New York minute. Employees realize that if they quit their job to pursue a more entrepreneurial enterprise or seek employment in a field that is more interesting to them, they do so at great risk to their families because they will be letting their company provided health care benefit slip away.
Is there anything more ‘un-American’ than that?
Congressional ‘traditionalists’, like Sen. Olympia Snowe, continue to argue that they don’t want to disrupt the current system, preferring to improve and build upon it. As a result, none of the five bills that have passed through Congressional committees, including the Senate Finance Committee where Wyden is a member, are willing to include the measure that would allow all Americans the opportunity to choose the insurance they want.
But Wyden is not giving up. Turned away by his own committee, the Senator is planning to reintroduce the idea on the floor of the full Senate.
As there is no logical basis whatsoever for the Senate to reject Wyden’s plan, this should be a debate worth hearing as the Senators argue their lobbyist prepared talking points.
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It’s all part of the Dems’ plan — which matches nicely to Obama’s incrementalist philosophy – that there shouldn’t be any radical changes to one of the most screwed up systems in the world.
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Excellent piece, cogently laid out. I wouldn’t blame resistance to Wyden on the Obama administration per se, though I agree that the president has a penchant for seeking compromise. I believe resistance to it rests squarely with the enormous influence of lobbyists on both parties in Congress. It is really troublesome, and I don’t know what can change it.
Thanks, Jerry. Coming from a journalism prof. at Emerson, that is high praise, indeed!
In response to another comment. See in context »This would be a great opportunity to get some bipartisanship into the bill. I don’t think either side should be against a public insurance exchange that’d allow Americans to buy whatever health insurance package they thought was best for them and their families: HSAs, HMOs, catastrophic insurance, etc.
And I agree, it’s a great way to market insurance reform to entrepreneurs and small businesses. “You know that job you hate but you can’t leave because it’d cost too much out of pocket to purchase the same amount of coverage yourself? Well, with the public exchange, it’s not as cheap as through an employer, but it’s most of the way there. Now you can quit your job, stop drinking and kicking your dog, and go start that small business that creates jobs in this stagflating economy. Go rent out an idle factory and make crap to sell to Germany. Here’s an HSA with $2k just for signing up; go get your kid some braces or something.”
I have been asking that same question myself.
I was both business owner, and the injured insured. I would like to offer what I have observed from that perspective.
From the point of view of the injured party, I want the best medical care possible. I don’t care what it costs, because I am not paying for it. My employer is.
As the business owner, I have a financial incentive to get the cheapest policy that the law will allow. I have no interest in shopping for the BEST policy, just the cheapest.
Both scenarios are represented every single day in America. And both perspectives are part of the problem.
It’s my personal opinion that “no one has more interest in spending my money wisely then I do”. I don’t think that is a revolutionary thought, but I don’t see in bandied about much.
I honestly don’t believe that the our current health care system is salvageable by reforms. The medical analogy I picture is that our politicians are trying to put band aids on wounds that have been festering for decades and that have now become gangrenous.
A fundamental change needs to occur, but I don’t see it happening.
Until such time as that becomes inevitable the only practical solution I see is real competition. Not quite sure how to bring that about when the insurance industry is a legalized monopoly. Maybe that will change but…..
I am with you on this one Rick. As long as they are not government-run co-ops, it would be great. We already have co-ops that are not run by the government and that do not try to ‘compete’ against the insurance companies themselves. If you went to Florida State, they could have an alumni co-op, if you belong to the NRA or the Sierra Club, they could have co-ops too for their members.
If you make all health care premiums deductible, then you even the playing field for everybody and if folks want to stay with their employer’s plan, then fine. If they want to find a better deal, they can do that too. Most importantly, as you say, the loss of insurance if they quit will no longer be the grossly inefficient allocation of resources that it is now. It will make it portable and untethered from a job if that is what the employee wants.
If you add in being able to buy across state lines, then you’ve got a nationwide market of individuals shopping for the best product at the lowest prices. Best of all, it has nothing to do with the government (any involvement of which introduces extra costs, inefficiencies, and less freedom) and the 85% of people who like their current plan can keep it and perhaps even find a better one.
What’s not to like?
I have to say I’ve yet to understand how allowing insurers to sell across state lines will help. It’s not that I’m against it, I just don’t get how it will make it better. The state insurance companies are all pretty much owned by the four or five largest insurers. So, any idea how it is, in practice, likely to help?
In response to another comment. See in context »Well, look at it this way, the insurance companies oppose lifting the ban on interstate sales for the very reason you say. As it stands now, they have antitrust protection within states. Obama has threatened them with removing that exemption to punish them for opposing him on his plan. The punitive, bullying big brother tactics nauseate me and are classic Chicago-Obama, but on the merits it is still a good move. After all, it is better to be a big fish in a small pond than to suddenly have to swim in the ocean with the rest of the gang.
Each state only has a handful of companies that sell there. I think somebody told me, though don’t quote me on it, that there are only about 5 health insurance providers in California. And all 5, I am sure, like it like that, with their captive audience and all. But there aren’t only 5 insurers in the country and to open CA up to the rest would result in “choice and competition” just like we have been told the Dems want.
In response to another comment. See in context »Maybe. I think its tough for the insurance companies that are not one of the big 5 to compete under any circumstances as they tend to be much smaller. As for the anti-trust, my understanding is that the states don’t provide the anti-trust protections that the federal government currently does, or is that what you were saying?
In response to another comment. See in context »I was a big advocate of interstate insurers, but I am not seeing as much value as I had originally thought. The problem is not the lack of competition in a state, but the extreme state regulations that make it nearly impossible to start up an insurance company in a state. (Which fits what Bill D. noted) However, what may be of value, pertaining to your article, would be co-ops that would exist across the country. This would allow for bigger risk pools to exist, but keep the policies at the state control (where they really should be). People in each state can determine how they want their policies structured; always allowing the competition to exist between states.
And perhaps the co-ops could have some leverage to introduce new insurance companies in states for more private competition.
Excellent article and something I’ve been advocating for a while. It should also include the same individual tax breaks that companies get.
And once again, your correct history shows how government meddling in salaries is what got us into this mess. Intentions are always good, but there are always unexpected costs by government wrongly tampering with free-market.
In response to another comment. See in context »Again- maybe. I haven’t seen much in the way of success on the part of the co-ops. Maybe a national co-op would be able to get enough mass to compete – but it hasn’t happened so far.
In response to another comment. See in context »Yes, I left a black hole in exactly how co-ops would be successful. A bit of wishful thinking on my part.
In response to another comment. See in context »[...] like Rich Ungar beat me to the punch on this one. While Rick and I obviously don’t share a lot of politics in common – he’d [...]