Observations on health insurance

Why would I enter this horrific hell hole? Why would I blog about such a thing?

First I think folks often become so wrapped up or blinded by details they lose sight of some over arching problems.

Second I fear that folks don’t realize how common and the problems are so I will share a bit of my own personal health insurance hell (in a couple of days—I’ve got to work up to it).

Mr. Simple Sense asks the question—Why is health insurance tied to our employment? The answer is that it snuck in as part of benefits packages post the Great War and then the tax code started to provide incentives around employers providing it and next thing you know the only way to get health insurance is through your employer. What started out as one or two companies searching for a competitive advantage (both in terms of hiring and in terms of cost), became imbedded via the tax code and now has become the only realistic way to get health insurance.

Just cause that’s the way it is doesn’t mean it’s a good idea. In fact it’s a horrible idea.

Employment decisions should revolve around how well your skills fit, how well the job pays, how well you fit into the culture, job security, etc. How good the health insurance plan is, how well it is funded, how it is structured, etc should not be part of that decision matrix.

It also makes our businesses less competitive. Part of the reason the BIG 3 are in so much trouble is the costs of employee benefits and one main reason they are getting bailed out is because they provide benefits to millions of people. But at the end of the day US employment costs are going to be much higher than in other countries where employers are not providers of health insurance. Also this practice means that small businesses don’t provide health insurance and independent contractors or self employed people don’t have health insurance.

Tying the two together just makes no sense. It’s like linking your housing choice to the clothes you get to wear. If you live on 2nd street you have to wear pink clothes, if you live on 3rd street you have to wear black clothes. IF you want to wear pink clothes you better find a house on 2nd street. And if you live on 1st street you get no clothes. (To change that back, if you work for company 2 you get HMO insurance, if you work for company 3 you get to choose between HMO and PPO, and if you work for small business company 1 you get no health insurance).

Mr. Simple Sense thinks this is stupid. It results in bad economics and limited to no choice in health insurance, and has the potential to create a nasty negative feedback loop. When is the worst time to lose your health insurance (or any type of insurance for that matter)? When you lose your job, of course. And low and behold that’s exactly what happens when you get your health insurance via your employer. And of course the worse it is the worse it is. If you get laid off but your employer survives well you got a shot a COBRA—it can be very expensive but at least you have the right to buy health insurance. And you might get some severance when you get laid off. If you company goes bankrupt, well all bets are off. No severance, no benefits, no right to buy into health insurance. And just like that you become uninsured and uninsurable.

More tomorrow.