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Well for many reasons (good and bad) healthcare is more expensive in the US than any other country. But why is healthcare bought individually more expensive th

Well for many reasons (good and bad) healthcare is more expensive in the US than any other country. But why is healthcare bought individually more expensive than healthcare an employer buys for all their employees? One is real and one is hidden. The hidden price difference is that most employees think they pay $200 per month in health insurance, but actually their employer is paying $600 and chips in $400 so the employee only pays $200. And of course, $200 taken out of a paycheck before you receive it doesn't feel as bad as a monthly $200 charge to your credit card. The other reason is adverse selection: When an entire employee base gets health insurance together, the people needing expensive care and the people not needing any care all average out together. But in the individual market, less healthy people are insured but more sick people are. Healthy people forgo health insurance, so the average cost per person rises.

baq 6y ago
...and changing the situation will make pension funds very unhappy because they invest in a guaranteed recurring income that medical services provide.
ghaff 6y ago
Or, at least, the young healthy people buy the cheapest insurance they can find while people who know they'll have a lot of expenses will tend to buy the gold-plated offerings.
mgkimsal 6y ago
> When an entire employee base gets health insurance together, the people needing expensive care and the people not needing any care all average out together. Often/usually, the people needing very expensive care aren't employed in the first place, as they're often not able to work, or at least not able to work in a company with employer-provided health insurance in the first place.
- kube-system 6y ago
  That is sometimes the case, but you also don't have to work a job to be covered under employer-sponsored health insurance -- you could simply be related to someone with a job.
JohnJamesRambo 6y ago
I never thought about that last part, thank you that makes sense.
- csharptwdec19 6y ago
  Pools are interesting to think about. Quick story. Once upon a time I was in a Contract-to-hire position where the contract house (CH) was paying my salary/etc until I was on-boarded. However, this was a small shop, they had 3 people running the business and less than 2 dozen contractors under them at a time. Between the Owner's Knee surgery, and some health issues I had had years prior, the CH's premiums were going to jump by 200$ (both on their end and the employee's). Thankfully they were able to find another insurance provider, but it was a pretty clear cut example of how sick people in the pool can sway costs by a large amount. That's part of why a lot of US companies now will give you discounts for various wellness tasks. My BIL's company offered an insurance credit just for taking a smoking cessation course (not even STOPPING.)

baq 6y ago

...and changing the situation will make pension funds very unhappy because they invest in a guaranteed recurring income that medical services provide.

ghaff 6y ago

Or, at least, the young healthy people buy the cheapest insurance they can find while people who know they'll have a lot of expenses will tend to buy the gold-plated offerings.

mgkimsal 6y ago

> When an entire employee base gets health insurance together, the people needing expensive care and the people not needing any care all average out together. Often/usually, the people needing very expensive care aren't employed in the first place, as they're often not able to work, or at least not able to work in a company with employer-provided health insurance in the first place.

kube-system 6y ago
That is sometimes the case, but you also don't have to work a job to be covered under employer-sponsored health insurance -- you could simply be related to someone with a job.

JohnJamesRambo 6y ago

I never thought about that last part, thank you that makes sense.

csharptwdec19 6y ago
Pools are interesting to think about. Quick story. Once upon a time I was in a Contract-to-hire position where the contract house (CH) was paying my salary/etc until I was on-boarded. However, this was a small shop, they had 3 people running the business and less than 2 dozen contractors under them at a time. Between the Owner's Knee surgery, and some health issues I had had years prior, the CH's premiums were going to jump by 200$ (both on their end and the employee's). Thankfully they were able to find another insurance provider, but it was a pretty clear cut example of how sick people in the pool can sway costs by a large amount. That's part of why a lot of US companies now will give you discounts for various wellness tasks. My BIL's company offered an insurance credit just for taking a smoking cessation course (not even STOPPING.)