Comment by mattgreenrocks
3 days ago
I never understood why health care had to be so tightly coupled to employment. All it does is tie people down, obfuscate costs, and give insurance companies more leverage over everyone, companies and employees alike.
Very long history I suggest you look into, because it's very interesting, but the oversimplified explaination:
after WW2, there was very obviously inflation. It was crazy in the EU and Japan, but the US still experienced some too. To fight this, the government made a then-common tactic of wage controls: basically cap off the maximum amount an employer can compensate workers, in order to fight the inflation spiral.
But there was an imporant exemption. This was only on wages and not any benefits given to employees in order to try and quell the inevitably angry employees. So when companies couldn't attract talent with more money, they offered more benefits. including employer sponsored healthcare. Perfect since these contributions were free from income tax.
And the modeled spiraled from there. a tax code passed in 1954 to let these contributions be business expenses, Medicaid came in the 60's, etc. It was great back then, but it was getting more expensive to navigate and companies started compromising to manage it. up to our favorite healthcare starting its vertical integration 20 years ago to come into what we know them for today.
This is an example of what economists call path dependence. In principle there's no good reason for access to health care to be coupled to employment and we wouldn't design the system that way if we were starting from scratch. Originally it started during WW2 when the federal government imposed wage controls to hold down inflation, so employers took advantage of a legal loophole to offer free employee benefits such as health insurance in order to attract workers. At that time healthcare was pretty cheap because it couldn't really do much. That system stayed after the war ended largely due to inertia. It probably benefits large employers because it gives them a cost advantage over smaller competitors but overall it's a terrible burden on the country.
A better approach would be to mandate that everyone purchase individual or family policies directly from insurers on open exchanges using pre-tax dollars, with subsidies for low-income consumers.
Why mandate it at all?
It's essentially the free rider problem. If we want to make affordable healthcare available to everyone then we have to force everyone to pay into the system to spread the risk around and get the healthy to subsidize the sick. It kind of has to work that way regardless of whether we have a single public payer funded by taxes or multiple private payers funded by insurance premiums; in the end the money has to come from everyone.