The Death of Employer Sponsored Health Insurance
New census bureau data shows a modest uptick in the number of Americans who do not have health insurance. (The number has not “soared,” contrary to some headlines.)
Dealing with the uninsured is a complicated question. As the National Center for Policy Analysis has shown time after time, the Left has every reason to overstate the severity of the problem. NCPA, however, can rightly be criticized for being too enthusiastic about whatever the Republican idea of the moment is. For example, in part because it was their idea in the first place, they like Health Savings Accounts a lot even though most consumers really don’t. In any case, the Kaiser Family Foundation–which has never struck me as ideological–offers a more nuanced look at the uninsured. The bottom line is this: after one gets through all the fuss about half of the uninsured are “soft core” adequate incomes to purchase health insurance or qualify for an existing government program. The other half can’t really find anything in the private market and don’t qualify for government programs. These people represent the real public policy problem, in part because any effort to help them buy health insurance without system-wide reform will attract a certain number of people who would otherwise get provide health insurance but prefer a subsidy. This, in turn, makes it harder for others to find health insurance. Thus, efforts like SCHIP, Medicaid buy-in, and state subsidized Medicare-like health plans in Maine and New York have tended to cover fewer uninsured than predicted but displace lots of people from employer-based private insurance.
The idea of employer-based health insurance, quite simply, is broken: there’s no really good reason why employers should provide health insurance in the first place. (They only do it because World War II price controls made it impossible to raise wages.)
So, on one hand, I’m happy that employer-based health insurance is dying what I think is a natural and long-overdue death.
On the other, making sure that everyone has medical care and takes responsibility for it requires doing far more to make it easier to buy in the private market. As I’ve written about elsewhere, I’d favor a “soft mandate” for people to buy insurance, total freedom to purchase insurance across state lines, and, to help enable it all, a tax credit proposal along the lines of the Burr-Coburn Every American Insured Health Act. Is it total free market? Nope. But it’s a lot better than we have now. Whatever happens, we need some alternative to the badly broken employer-based system and the newest census data just helps drive home the point.