“having large-employer HR departments screening options and negotiating with insurers has real value to employees.”
“And of course you have multiple industries – the insurance companies, and also the providers, and the reams of consultants, brokers, and experts, and the HR professionals – who have organized themselves around the current system. They all know or suspect that any major change will be breaking their rice bowl.”
Aren’t some of the largest/wealthiest companies looking to skip insurers and other middle men?
A lot of larger companies self-insure already using insurers only for the record-keeping and hospital negotiating parts.
Regarding the risk of foregoing health insurance - of course it is risky. My point is that there is a threshold where the risk can be worth taking. If a young healthy person is trying to get ahead, it makes little sense for him to impoverish himself for the sake of free annual exams and subsidizing the care of others if it costs too much.
By the way, a lot of retired people who are younger than Medicare age do forego health insurance. They move to countries (e.g. Thailand) where there is more of a free market for healthcare and it is cheaper. Countries that socialize healthcare tend to have very secure borders with their welfare system.
Using the term “capitalist” to describe the wealthy class is a bit disingenuous. You could just as meaningfully call them “green.”
It makes no sense to tie health insurance to employment these days. Much better to have the cash and buy individual insurance just like any other kind of insurance. But any measure designed to increase the freedom of the market in healthcare tends to cause fits no matter how sensible it is.
Alternatively, treat the self-insured similarly wrt to taxes. In other words, allow individuals to purchase health insurance (ACA-approved plans) pre-tax.
A free market for medical care that is not purely elective (e.g. most cosmetic procedures) has problems functioning well compared to free markets in many other things:
A. From an individual’s point of view high (effectively unlimited compared to the amount of money most people have) cost risk and insufficient predictability of future medical costs means that most people will want at least some (catastrophic-level) insurance. Also, when going into emergency or urgent care, there may not be time to get treatment options and costs ahead of time for shopping purposes.
B. From an insurance company’s point of view, future medical costs are predictable enough on an individual basis through pre-existing conditions that they would exclude many potential customers on that basis to avoid adverse selection.
C. Of course, whenever insurance is a significant factor in the market, bureaucratic costs increase and price transparency drops.
It may not have been this way in the past when medical costs were much lower relative to the money people had at the time (because many of the very expensive treatments possible today just did not exist). Although even then, many people did forego medical care; some of the early employer-based medical coverage was started because employees foregoing medical care meant more sick time and worse productivity (of course, WW2 policies then led to the expansion of employer-based medical coverage for other reasons). But that was then; making it work today would be more difficult.
If all employer linked healthcare was terminated and every person in the country was using the ACA marketplace, it would be an interesting social experiment as you would truly have the full group dynamic and spread of risk. I wonder if the prices would go up or down? The scary thing, though, is to be the guinea pig for a couple of crazy scary expensive years as they get things figured out.
Personally, I think the overall market would be better for having buy in from everyone, but I am not sure I want to be the one at risk when it begins.
Well, since many other countries have universal healthcare systems that do work and the USA spends more per capita currently on healthcare than other countries, my guess is we’d save money.
“Enough to self-insure medical costs assuming no Medicare plus whatever assets will provide investment income to comfortably cover your other financial needs for the rest of your life, assuming no Social Security.”
Wealthy people don’t self insure because:
they can easily afford the premiums regardless of the cost
they don’t want any of their accumulated wealth going to pay for millions of $ of medical expenses
When we talk about health care coverage in the US, we have to reckon with path dependence. Most health economists, and many other people, believe that we’d be better off as a policy matter if health insurance coverage was not linked to employment. But that doesn’t mean we can get there. Politically it’s a hard sell.
Every other country spends much much less than the US per capita on health care. But that doesn’t mean we could spend that small amount if we switched to some kind of universal coverage. To control costs, we’d have to control costs, and the people who presently are paid to deliver or administer health care like money and don’t want to be paid less of it.
While having insurance for catastrophic-level medical costs is often desirable even if you can afford to self-insure, being able to self-insure can be desirable if you are considering the forseeable future where insurance is just not available at all (e.g. ACA marketplace fails, or ACA is repealed, and you have a pre-existing condition).
Obviously, this means needing much more money than one would need if one can reliably count on being able to buy insurance for catastrophic-level medical costs.
With the amount of medical school debt physicians in the US have to take on (unless they come from wealthy generous families), it is not surprising that they would not want to be paid less.
But the reality is that providers ARE being paid less and less as third party payors cut reimbursement rates. The large practices and hospitals have some ability to negotiate, but it is no easy task.
My kids have pre-existing conditions, as do H and I. We have all had asthma for most of our lives, never mind that we have never been hospitalized or even had any urgent care for it.
When we tried to buy insurance for S because he was aging off our plan, he was outright rejected even though he was otherwise healthy and only 22. We were able to get a BCBS policy as an extension policy from. Aug-Dec until ACA mandated that our family policy cover all children under age 26. My mom thought I was crazy to be so frantic to be sure there were no gaps in his medical coverage but I’ve heard of too many folks swamped by medical bills and didn’t want any insurer to say we ever had a gap in coverage as an excuse not to cover S.
We are very fortunate to have coverage from H’s former employer of 45 years—we pay some of the family premium and former employer pays some. S is also fortunate to have medical coverage as a benefit from his job. Yes, I sure wish it weren’t tied to employment.
I don’t have answers—some alumni assns used to offer medical insurance but I’m not sure if they still do. Us often offer insurance—maybe one could just take an online course/term and buy insurance?
“While having insurance for catastrophic-level medical costs is often desirable even if you can afford to self-insure, being able to self-insure can be desirable if you are considering the forseeable future where insurance is just not available at all (e.g. ACA marketplace fails, or ACA is repealed, and you have a pre-existing condition).”
They have the accumulated wealth to be able to do that if they have no other choice, but until then they are not stupid enough to go without health insurance.
Smart wealthy people do not take stupid risks like going without health insurance. Most also have long term care insurance, because again, they are not stupid.
Actually, it doesn’t have to be single government payer at all. You seem biased towards that and that’s fine. But other options include an large individual market with similar requirements to today’s group pollicies.
And sure, you could set up a system where employers can offer a “reimbursement” for premiums similar to 401(k) contributions – and let non-employed people have the same tax advantages. We just need to think outside the box of what is feed to us via. the media and the pols.
And it is important to do the one thing that the ACA failed to do. Focus on the cost side of the ledger, starting with malpractice reform.
Like what the ACA tried to do with the (much liked) guaranteed issue that had to be linked with the (much disliked) individual mandate?
Employer group plans typically have guaranteed issue without pre-existing conditions limitations (or, at most, with short time limits) but do not let employees opt out without proof of other insurance (e.g. from spouse employment).
If that is all the ACA tried to do – give access to group insurance type plans to individuals – it probably would have worked. But it went way further than that.
In our state, if you work 3 weeks in a row for 20+ hours, you have to have employee health insurance and can only decline if you can price you have coverage elsewhere, eg from a spouse. You have to file a form stating you have such coverage with the HI Dept of labor. We have high med insurance coverage in our state but many employers are careful to avoid having employees work 20+ hours/week. Even the state and fed give often only want P/T hires who are only allowed 17 hrs/el to avoid triggering med ins and other benefits.
Thus makes a lot of employees have to hold multiple p/t jobs because employers prefer to not have to provide benefits.
Yes, most large companies (and lots of not-so-large companies, you don’t have to be that large to be in this category) effectively self-insure, but their self-insurance is really a turnkey service provided to them by a major health insurance company. For fees, of course. As far as the world can tell, the employees have Aetna insurance, or United Healthcare insurance, and claims and co-pays and eligibility all get processed through the insurer’s system. Care is provided within the insurance company’s network, at the prices and on the terms the insurance company has negotiated. The only difference is that instead of paying monthly premiums the employer is maintaining reserves as recommended (and possibly managed) by the insurance company, and paying the cost of insured care out of those reserves.