Thought experiment time here--separate healthcare from employment?

[rothwem]

I’ve long thought that healthcare needed a revamp.  It costs too much, too many people are going uncovered, etc.  I think the largest problem with healthcare is that, for most people with insurance, it is provided through their employers.  On the surface, it seems like a nice benefit, but it does something extremely negative—it ties people to their employers.  My #1 concern after I reach my “number” is healthcare, since I’ve seen how expensive it can be when you’re not affiliated with a corporate entity.  For that reason, I’ll probably remain a semi-SWAMI for a long ass time. 

Since the corporate entity provides the health insurance, that health insurance is the main reason (or excuse?) I’ve seen people use to NOT start their own business.  In the businesses I’ve seen, there’s usually an period where a small business goes from a side hustle to a full time thing.  My friends that I’ve seen do this have gone without health insurance because its just too much of a cost.  It worked out for those people, but if they were to trip and break an ankle walking down the street, they would suddenly have a Toyota Camry sized debt load AND a non-functioning business while they got fixed up again. 

So with that in mind, this is where the thought experiment comes in.  What would happen if we made it illegal for employers to offer healthcare?    Would it expand the pool, resulting in lower rates? With the influx of new customers, would the healthcare system prices skyrocket?  Would the gov’t have to step in and regulate?  Are they really NEW customers if they were already with an employer?  Would the new competition result in better service? If it resulted in a price drop, it might help the working poor, who are commonly employed on contract, without benefits.  They’d at least be on a more-level playing field with the W2/40 hour employees with full benefits.   

I would also hope that it would bring a surge in contract employment instead of swarms of mindless W2 drones like myself.  Contract employment is more efficient, and I’d love to be paid by deliverable instead of my hours.  I could work harder to produce more, or I could chill out and take some time if I wanted, all while not worrying about crashing my mountain bike and ending up with $50k in debt from a broken collarbone, because my insurance is a constant, recurring, reasonably priced monthly bill like my mortgage/rent. 

I’m interested to hear what people think would happen if healthcare were forcibly divorced from employment. 

[CheapScholar]

I seem to remember reading that healthcare is tied to employment because FDR allowed employers to offer it to employees and the value of that benefit was not considered taxable, which was significant due to the tax rates. 

Your question is interesting.  Obviously, though, it’s incredibly unlikely to happen.  It really depends if the government still placed a mandate for people to buy health insurance.  I think, either way, you’d have people buying shitty cheap healthcare insurance policies unfortunately.  Most Americans are shitty at saving, shitty at budgeting and want instant gratification.  You’d have people buying shitty healthcare insurance so they could buy shiny new SUVs.  So, they’d get sick or hurt and still have companies declining payments.  Healthcare is a mess.  The older I get, the more I’m for single payer. 

[flipboard]

If you want to know how well it'll work, just go look at almost every other country in the world. Some of them are admittedly in a bad shape, but plenty of them are in a pretty good shape.

That healthcare taxation is different when payed by the employer (in the country you describe) is, to put it mildly, completely crazy. Where I live, if my employer gives me a benefit (free transport, free food, etc.) I still get taxed on it - meaning that employer benefits can't be used as a tax dodge, which IMHO is the only fair way to do it. (OTOH a certain portion of my health insurance payments is deducted from taxable income - but that way everyone gets the same benefit, as opposed to only employers not having to pay tax on it.)

The thing that really affects healthcare prices however is regulation and transparency. Obamacare was a good start, but had a few holes too many.

[PiobStache]

Two quick points:

1)  This work/insurance joining happened during WWII.  Wage freezes were put in place so the war effort at home of building tanks, munitions, etc. would not have wage battles.  Of course people continued to response to incentives so larger manufacturers started offering non-monetary compensation with healthcare being a major one.  After the war it had become part of the US employment landscape.

2)  The law would never withstand judicial review, i.e. it ain't happening.

[nessness]

Ideally, if this happened companies would pass their savings from not providing health insurance on to their employees in the form of higher wages. But I'm highly skeptical that this would actually happen, so I think the most likely result is that companies would increase their profits and most people's health insurance costs would increase.

[J Boogie]

I think it would be in the best interest of the USA to do this.

A nation should either provide the basics for it citizens or not, rather than leaving things in the hands of an economy that has its ups and downs.

Offloading this to employers has been great for those who have reliable salaried positions and awful for those who don't.

Imagine if we did this for education. Imagine Jimmy's Mom and Ellie's Dad work at St. Jude's Hospital. Jimmy's Mom works at the cafeteria for a subcontractor that doesn't provide as good of benefits. Ellie's Dad is a nurse there. Seems pretty crazy that Jimmy's parents would have to pay 5x as much as Ellie's parents to go to the same school that Ellie goes to.

And yet this is how our healthcare works.

[PiobStache]

A nation should either provide the basics for it citizens or not, rather than leaving things in the hands of an economy that has its ups and downs.

Germany is considered one of the best healthcare systems in the world.  Just like the US the majority of healthcare is paid through employer and employee contributions.  Germany is where the first universal healthcare plan was instituted and the system is referred to as the Bismarck system.  It is used, in one form or another, in the many of the world's top healthcare systems.

Signed,

Just Another MBA

[rothwem]

Your question is interesting.  Obviously, though, it’s incredibly unlikely to happen.  It really depends if the government still placed a mandate for people to buy health insurance.  I think, either way, you’d have people buying shitty cheap healthcare insurance policies unfortunately.  Most Americans are shitty at saving, shitty at budgeting and want instant gratification.  You’d have people buying shitty healthcare insurance so they could buy shiny new SUVs.  So, they’d get sick or hurt and still have companies declining payments.  Healthcare is a mess.  The older I get, the more I’m for single payer.

Right, I think its pretty unlikely that this type of law would be passed.  I'm not sure why it would be considered unconstitutional though.  I think its more likely to not get passed because it doesn't fit into either tribe's rhetoric.  Republicans would call it a government over-reach into corporate affairs, and Democrats would be upset because it's not a single payer system. 

Anyways, single payer is a pretty generic term, with a lot of ways for it to be implemented.  I'm sure that the gov AND private business can come up with ways to mess it up. 

[rothwem]

A nation should either provide the basics for it citizens or not, rather than leaving things in the hands of an economy that has its ups and downs.

Germany is considered one of the best healthcare systems in the world.  Just like the US the majority of healthcare is paid through employer and employee contributions.  Germany is where the first universal healthcare plan was instituted and the system is referred to as the Bismarck system.  It is used, in one form or another, in the many of the world's top healthcare systems.

Signed,

Just Another MBA

I'm not from Germany, so I'm not sure how it works there. 

If you get fired/layed off/quit to start a company...do you still have insurance?

[PiobStache]

I'm not from Germany, so I'm not sure how it works there. 

If you get fired/layed off/quit to start a company...do you still have insurance?

I'm not from there either.  Here's a nice write up.

https://international.commonwealthfund.org/countries/germany/

[TheBeeKeeper]

This is what virtually every country in the western world does.
Nobody needs to worry about employer health insurance benefits, who they are married to, or preexisting conditions. Everyone has access to healthcare and nobody goes bankrupt or "just" broke over medical debt.
Everyone pays about 10% of their income and you are covered for EVERYTHING. No matter if you are self-employed or how many employees are at your job.
People can still purchase additional private insurance if they want to have  'VIP' options (e.g. get a second or third opinion, get a private room at the hospital), and those policies are pretty reasonably priced. Way cheaper to pay for the single-payer program + excellent VIP rider than the cost of a comparable plan here in the US
If you don't work, you still pay a minimal amount per month until you start working again. the "scary government" guarantees that so people have a way to survive and don't die in the street because they needed 4 months to find a job. It pays off for everybody in the long run

I have never seen a single medical bill until I moved to the US.

Here I got a dozen different bills for a simple fracture - from the ER, the ER doctor, the radiologist, the X-rays, the orthopedist, more X-ray bills done at the orthopedist's office, PT bills, more bills from the orthopedist for follow-up, facility bill from the hospital 8 months after. Ended up paying close to 1K$ with the best insurance from a big employer
This is insane. Americans pay x2 and get 1/2 as much compared to the developed world.

I don't know how this entire nation was fooled into the current situation.
Time to cut the middleman, cut the ties to employment benefits as the major source of healthcare coverage, give everyone real access to healthcare minus the financial worries. This country has the resources to do it.

[PiobStache]

People can still purchase additional private insurance if they want to have  'VIP' options (e.g. get a second or third opinion, get a private room at the hospital), and those policies are pretty reasonably priced. Way cheaper to pay for the single-payer program + excellent VIP rider than the cost of a comparable plan here in the US

So there are two problems with your statement here.  First, not all countries allow additional, VIP, private insurance.  Canada does not.  The Canada Health Act of 1984 expressly made it illegal for private payments of services covered under the CHA.  Second, there are more options than single payer and many of the top systems in the world are not single payer. 

[seattlecyclone]

People can still purchase additional private insurance if they want to have  'VIP' options (e.g. get a second or third opinion, get a private room at the hospital), and those policies are pretty reasonably priced. Way cheaper to pay for the single-payer program + excellent VIP rider than the cost of a comparable plan here in the US

So there are two problems with your statement here.  First, not all countries allow additional, VIP, private insurance.  Canada does not.  The Canada Health Act of 1984 expressly made it illegal for private payments of services covered under the CHA.  Second, there are more options than single payer and many of the top systems in the world are not single payer. 

Exactly. I think a lot of folks in the US tend to use the term "single payer" to refer to basically anything that any other rich country does for health care, but lots of other rich countries with universal coverage nevertheless have multiple payers, not a single one.

[PiobStache]

Exactly. I think a lot of folks in the US tend to use the term "single payer" to refer to basically anything that any other rich country does for health care, but lots of other rich countries with universal coverage nevertheless have multiple payers, not a single one.

It is my ongoing frustration that in the US the healthcare debate is framed around the current US status quo or a single payer as if those are the only two options.

Just got back from Seattle.  Great city, great food, great vide.  COL and traffic I could live without.  ;)

[TheBeeKeeper]

People can still purchase additional private insurance if they want to have  'VIP' options (e.g. get a second or third opinion, get a private room at the hospital), and those policies are pretty reasonably priced. Way cheaper to pay for the single-payer program + excellent VIP rider than the cost of a comparable plan here in the US

So there are two problems with your statement here.  First, not all countries allow additional, VIP, private insurance.  Canada does not.  The Canada Health Act of 1984 expressly made it illegal for private payments of services covered under the CHA.  Second, there are more options than single payer and many of the top systems in the world are not single payer. 

Exactly. I think a lot of folks in the US tend to use the term "single payer" to refer to basically anything that any other rich country does for health care, but lots of other rich countries with universal coverage nevertheless have multiple payers, not a single one.

Nope. Sorry I was misunderstood. It is still a single payer, covering everything. The 'VIP plans' are a rider, on top of the single payer. The single payer system still pays for everything medically necessary (decided by YOUR Dr, and NOT by an insurance company), and everyone in the country has that.
The extra insurance if for extra fluff. Say I'm having a surgery and I want to have my own room instead of sharing with a roommate. Or I want to speed up a non-urgent colonoscopy, with the VIP insurance I will wait a week, instead of, say, a month without it.
The private insurance does not pay for services covered by the national health insurance and does not replace it. It kicks in after.
e.g. the national insurance covers 2-3 days in the hospital after having a baby. A VIP insurance grants the mother and her spouse a hotel-like room instead of the standard hospital room.

Bottom line is that every single person has health coverage, it's single-payer, so no out-of-network shinanigans, and nobody gets ruined financially over medical debt.

[TheBeeKeeper]

People can still purchase additional private insurance if they want to have  'VIP' options (e.g. get a second or third opinion, get a private room at the hospital), and those policies are pretty reasonably priced. Way cheaper to pay for the single-payer program + excellent VIP rider than the cost of a comparable plan here in the US

So there are two problems with your statement here.  First, not all countries allow additional, VIP, private insurance.  Canada does not.  The Canada Health Act of 1984 expressly made it illegal for private payments of services covered under the CHA.  Second, there are more options than single payer and many of the top systems in the world are not single payer. 

Exactly. I think a lot of folks in the US tend to use the term "single payer" to refer to basically anything that any other rich country does for health care, but lots of other rich countries with universal coverage nevertheless have multiple payers, not a single one.

Nope. Sorry I was misunderstood. It is still a single payer, covering everything. The 'VIP plans' are a rider, on top of the single payer. The single payer system still pays for everything medically necessary (decided by YOUR Dr, and NOT by an insurance company), and everyone in the country has that.
The extra insurance if for extra fluff. Say I'm having a surgery and I want to have my own room instead of sharing with a roommate. Or I want to speed up a non-urgent colonoscopy, with the VIP insurance I will wait a week, instead of, say, a month without it.
The private insurance does not pay for services covered by the national health insurance and does not replace it. It kicks in after.
e.g. the national insurance covers 2-3 days in the hospital after having a baby. A VIP insurance grants the mother and her spouse a hotel-like room instead of the standard hospital room.

Bottom line is that every single person has health coverage, it's single-payer, so no out-of-network shinanigans, and nobody gets ruined financially over medical debt.

oh and I forgot to mention that all those VIP perks can be purchased out of pocket by anyone, and the cost is not insane. Less than what I pay here anyways in co-pays and deductibles of a private expensive insurance

[PiobStache]

Nope. Sorry I was misunderstood. It is still a single payer, covering everything. The 'VIP plans' are a rider, on top of the single payer. The single payer system still pays for everything medically necessary (decided by YOUR Dr, and NOT by an insurance company), and everyone in the country has that.
The extra insurance if for extra fluff. Say I'm having a surgery and I want to have my own room instead of sharing with a roommate. Or I want to speed up a non-urgent colonoscopy, with the VIP insurance I will wait a week, instead of, say, a month without it.
The private insurance does not pay for services covered by the national health insurance and does not replace it. It kicks in after.
e.g. the national insurance covers 2-3 days in the hospital after having a baby. A VIP insurance grants the mother and her spouse a hotel-like room instead of the standard hospital room.

Bottom line is that every single person has health coverage, it's single-payer, so no out-of-network shinanigans, and nobody gets ruined financially over medical debt.

All single payer systems are not the same and you presented them as fungible.  And again, there's more paths to universal than Canadian style single payer.

[J Boogie]

A nation should either provide the basics for it citizens or not, rather than leaving things in the hands of an economy that has its ups and downs.

Germany is considered one of the best healthcare systems in the world.  Just like the US the majority of healthcare is paid through employer and employee contributions.  Germany is where the first universal healthcare plan was instituted and the system is referred to as the Bismarck system.  It is used, in one form or another, in the many of the world's top healthcare systems.

Signed,

Just Another MBA

I think you misunderstand my point. Germany provides the basics for its citizens. If the economy is rough, laid off workers have access to affordable quality healthcare there. They don't here in the US.  We have corporations that offer great healthcare plans, and then the healthcare plans for everyone else are awful. Pete blogged about this essentially deciding to choose a bronze ACA plan that would be expensive and offer pretty lackluster coverage instead of opting out - because opting out and paying the penalty, though a more likely a better move financially, felt like poor citizenship for the Adeneys.