3 ms·

Why does the US tie health care to employment? Why is it not tied to the individual and thus transferrable between employers?

by axefrog 13y ago

dalke 13y ago
As I understand the history, during the wage freeze of WWII, companies used medical insurance as a form of compensation. This also helped the companies because the men left behind tended to be not as healthy as those who were conscripted. Once you think of it as compensation, you can see why the benefits are tied to the employer. "Join us; we have good healthcare."
rdl 13y ago
It started as a legacy of wage controls during WW2 (they added a bunch of fringe benefits to compete without technically breaking the law), but continues because medical insurance is tax deductible for an employer who buys it for his employees, but NOT for an individual who buys it for himself or his own family. So it essentially costs an individual 20-55% more than it could cost an employer. (There's also the risk-pooling aspect; an employer can get a group rate with guaranteed issuance because it's assumed they will be selecting employees for moderate to good health (or else they'd be disabled vs. working), or at worst randomly, with only random-in-population odds of high-cost dependents. There's an adverse selection with voluntary individual insurance; healthy people would rationally not get insurance if it were really expensive relative to their expected utilization, whereas someone with a chronic condition or high risk actually would get insurance even at a relatively high cost. Which in turn drives up the costs per insured, which drives up the rate...eventually becoming uneconomic. In practice, a lot of people with chronic conditions in their families actually do seek out stable jobs with big employers with good insurance to cover it, vs. doing startups or whatever, which imposes a loss on the economy if they would otherwise have been the next Elon Musk.) The Republicans in 2008 (McCain?) were actually arguing for making medical insurance non-deductible for employers and I think deductible for individuals, which was then seized upon as "taking away your health insurance". Ironically that position of moving insurance away from employers seems to be a long-term goal of the ACA/ObamaCare.

Why does the US tie health care to employment? Why is it not tied to the individual and thus transferrable between employers?

by axefrog 13y ago

Why does the US tie health care to employment? Why is it not tied to the individual and thus transferrable between employers?

dalke 13y ago

As I understand the history, during the wage freeze of WWII, companies used medical insurance as a form of compensation. This also helped the companies because the men left behind tended to be not as healthy as those who were conscripted. Once you think of it as compensation, you can see why the benefits are tied to the employer. "Join us; we have good healthcare."

rdl 13y ago

It started as a legacy of wage controls during WW2 (they added a bunch of fringe benefits to compete without technically breaking the law), but continues because medical insurance is tax deductible for an employer who buys it for his employees, but NOT for an individual who buys it for himself or his own family. So it essentially costs an individual 20-55% more than it could cost an employer. (There's also the risk-pooling aspect; an employer can get a group rate with guaranteed issuance because it's assumed they will be selecting employees for moderate to good health (or else they'd be disabled vs. working), or at worst randomly, with only random-in-population odds of high-cost dependents. There's an adverse selection with voluntary individual insurance; healthy people would rationally not get insurance if it were really expensive relative to their expected utilization, whereas someone with a chronic condition or high risk actually would get insurance even at a relatively high cost. Which in turn drives up the costs per insured, which drives up the rate...eventually becoming uneconomic. In practice, a lot of people with chronic conditions in their families actually do seek out stable jobs with big employers with good insurance to cover it, vs. doing startups or whatever, which imposes a loss on the economy if they would otherwise have been the next Elon Musk.) The Republicans in 2008 (McCain?) were actually arguing for making medical insurance non-deductible for employers and I think deductible for individuals, which was then seized upon as "taking away your health insurance". Ironically that position of moving insurance away from employers seems to be a long-term goal of the ACA/ObamaCare.