Columnist: Liberate Employers and Health Care by Letting Them Thrive Separately

Boston Globe writer Jeff Jacoby recently scribed an interesting column stating the case for the separation of employment and health care. While most of us have accepted this as an inevitable reality during our lifetimes, he says it simply stems from World War II wage controls that are no longer relevant:

With more than 90 percent of private healthcare plans in the United States obtained through employers, it might seem unnatural to get health insurance any other way. But what’s unnatural is the link between healthcare and employment. After all, we don’t rely on employers for auto, homeowners, or life insurance. Those policies we buy in an open market, where numerous insurers and agents compete for our business. Health insurance is different only because of an idiosyncrasy in the tax code dating back 60 years – a good example, to quote Milton Friedman, of how one bad government policy leads to another…

Unconstrained by consumer cost-consciousness, healthcare spending has soared, even as overall inflation has remained fairly low. Nevertheless, Americans know almost nothing about the costs of their medical care. (Quick quiz: What does your local hospital charge for an MRI scan? To deliver a baby? To set a broken arm?) When patients think someone else is paying most of their healthcare costs, they feel little pressure to learn what those costs actually are – and providers feel little pressure to compete on price. So prices keep rising, which makes insurance more expensive, which makes Americans ever-more worried about losing their insurance – and ever-more dependent on the benefits provided by their employer.We thus ended up with a healthcare system in which the vast majority of bills are covered by a third party. With someone else picking up the tab, Americans got used to consuming medical care without regard to price or value. After all, if it was covered by insurance, why not go to the emergency room for a simple sore throat? Why not get the name-brand drug instead of a generic?

0 thoughts on “Columnist: Liberate Employers and Health Care by Letting Them Thrive Separately

  1. A caveat to consider regarding health “insurance”. I was recently hospitalized for one week in the intensive care unit. I was in a coma for 5 days. I pay a hefty health insurance premium each month for my family. It is more than my mortgage, second mortgage and car payment combined. The final bill/invoice from the hospital arrived and my portion was more than a Hybrid automobile while the insurance company’s would not buy a 1986 Skylark. Why have coverage if you are still responsible for 80% of the bill?
    Matt, it may be something to look into how catastrophic coverage will claim “max out of pocket of $6000” yet turns into close to $40,000. Add the premium and I’m paying $60000+ for 2008.