The First Step Won’t Be Easy – But It’s Worth It

Eliminating the tax give away on employer sponsored health insurance would cause most employers to drop their group health plans. Deprived of  a health insurance distribution system (employers), employees would be force to purchase their own personal health insurance. Employers that didn't drop their group health plans would be forced to take at good hard look at their insurance premiums.

The employer groups will protest the loss of the tax breaks, of course. But could that be much to do about nothing? Let’s do the math. Health Insurance is really expensive, regulatory compliance is complicated and confusing and the overhead necessary to administer group health insurance benefits is really expensive (an entire college industry has grown out of employer benefit admin.), so what does it really cost the employer group to offer health insurance to their employees? Are the deductions really worth the cost? And why in the world would a business want to be responsible for providing health insurance to their employees anyway?

Wait, what! Make employees pay for their own health insurance, that’s outrageous? Yes, employees will have to buy their own health insurance, or claim as income the value of their employer sponsored health insurance. Company executives and other highly paid employees will complain the loudest because they are the ones who benefit the most from receiving extremely expensive insurance tax-free.  But it’s not all bad, American businesses would be free of the expense of operating our nation’s health insurance distribution system and could finally increase wages for workers, employees could select their own  health coverage instead of simply accepting what the employer  provides, and best of all premiums will drop as this new huge block of consumers enter the individual marketplace and demand affordable health insurance.

Revising the tax code wouldn’t necessarily put an end to our “accidental” health care system, but it would force employer groups to reconsider their relationship with group health insurance. It would motivate Insurers to adjust their pricing to reflect the new "subsidized free" premium environment and put pressure on health care providers to adjust their cost structure. Employees would finally become informed consumers of health insurance who, like all good consumers, seek to minimize cost and maximize value for their particular situation. The result would be a consumer driven health care system where the cost of health care would accurately reflect what the market will bear.  A simple change of the tax-code would bring about a restructuring of our health insurance distribution system and bring the full force of collective individual consumerism to bear on our health care system, improving care and reducing cost

However, as we learned the previous post, free market capitalism does not work in a health care economy where timing and choice are not an option. Been there, done that. The next logical step is to transition from the individual base distribution system to a centralized system with the goal of Health Care-for-All. A system that eliminates the profit motive, mitigates regulatory and compliance cost, brings to bear economies of scale (volume discounts), streamlines administration and reduces the cost of health care. In short, the evolution of a system in which Health Care would finally become simply Health Care, and where  health not profit is the ultimate goal.  

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