Reflections on Impending Obamacare
Reform was surely needed to remove distortions imposed on medical care by its financing. The next big questions are what the Affordable Care Act really reforms; and, whether the result will be affordable for the whole nation. Here are some proposals, just in case.
|Health Insurance is Everyone's Business|
Employer-based Health Insurance. From an employer's viewpoint, a sick employee is an expensive employee, but there are special employer twists to employee illness. The most effective comment a former employer can volunteer in a letter of recommendation is to say that over several years, the employee was "never late and never missed a day of work". It's hard to predict medical costs in advance, but the identification of someone as "accident prone" is the kiss of death for hiring or promotion, because the difference between a devastating injury and a trivial one, is about half an inch. Disabled persons are identified as being unable to do the job, and may include less visible issues, such as being so attached to local health providers they become unwilling to accept a transfer to another city. Some of this affects health insurance premiums, some may not. But the large employers are largely self-insured, so they have more access to individual health cost information, and can longitudinally assess whether their Human Resources departments are doing what is vaguely stated to be a "good job." Some of this is no more than shrewd selection of an agent for administrative services-only. Large self-insured employers almost always have lower health insurance costs, which in the aggregate is likely to mean healthier employees, the cream of the crop.
New or small businesses generally do not have a large enough employee group to justify basing next year's budget on last year's health cost experience. So "small group" insurance tends to reflect the overall higher costs of small-group employees in the whole geographic region, and "individual policies" are the most expensive of all, because they generally have a good idea what they need and want in an insurance policy -- and seek it out. Add to that factor the preferential enjoyment of tax exemption, and the system has gravitated into one which could not have been designed by experts to be so preferential to certain types of business models.
For the sake of economy of effort, let's first see what we can do about portability and privacy, indirectly, by getting rid of the tax preference.
Participants in sports where a great deal of betting goes on about game outcomes and career records have good reason to fear careless gossip about injuries, illicit drug use or even cataracts. Aging actresses fear their younger competition; almost everyone is uncomfortable about addictions and deviant behavior. The decline of primogeniture and the rise of antibiotics have even undermined the devastating consequences of suspicions about true paternity. Whether the resulting business models are going to lead to a decline in concern about patient privacy in any forum, could well be argued at length. What's more likely is that most people will tire of the subject.
Nevertheless, no one can dispute that employees in a favorable health insurance arrangement are quite reasonably reluctant to change employment to a situation which loses them a tax deduction on 30% of their salaries. The situation is called "Job lock". Portability is a real problem, while privacy is much less consequential, except to some very vocal groups. Even though it seems unrelated, the manifestly unfair design of this tax preference is one of the reasons American politics have become so restless about seemingly unrelated matters. The freedom to go somewhere else has become impaired. For the sake of economy of effort, let's first see what we can do about portability and privacy, indirectly, by getting rid of the tax preference.
Originally published: Tuesday, April 30, 2013; most-recently modified: Thursday, May 16, 2019