
Does Employment-Based Insurance Make US Medical Care Unfair and Inefficient? - adolph
https://jamanetwork.com/journals/jama/fullarticle/2733520
======
joe_the_user
The thing about employer-funded healthcare after WWII is that for a few
decades, that health care was restricted to the Blue Cross/Blueso Shield
monopoly [1], which functioned as a semi-socialized monopolies in the sense
that network members would take anyone and prices were somewhat controlled.
This situation gradually broke down in the 1970s and 80s as other insurance
companies entered the health care field and offered insurance to only the
healthiest individuals. Eventually, Blue Cross' nonprofit status was revoked
and insurance became a free-for-all (where those with existing conditions were
effectively thrown under the bus).

People don't realize that a lot of American industry in 1960s and 70s was
"regulated monopolies" (Health care, airlines, trucking, telephone, etc).
These provide a lot of the benefits that social democracy provides in Europe
but was less obviously "socialized".

And similarly, the huge sea change that happened with Reagan breaking
regulated industries wasn't and isn't noticed as the huge change that it was
(and it is still reverberating through this society).

The thing is, health care is "natural monopoly", it's a situation where
competition is meaningless at the point when a person shows up bleed at the
emergency room. The process of "opening health care for competition" from the
1970s onward grew a hundred poisonous rent-seeks in every part of supply
chain, from medical equipment operators to hospitals to insurance companies.
Blaming _just_ insurance companies is a bit misguided after all this.
Certainly they play a part but the basic structure of private health care just
naturally goes this way unless it either seriously regulated or nationalized.

[1]
[https://en.wikipedia.org/wiki/Blue_Cross_Blue_Shield_Associa...](https://en.wikipedia.org/wiki/Blue_Cross_Blue_Shield_Association#History)

~~~
krupan
"The thing is, health care is 'natural monopoly', it's a situation where
competition is meaningless at the point when a person shows up bleed at the
emergency room."

This is a bit of a false narrative. 99% of healthcare is not emergency room,
imminent bleeding out. I believe we should have government provided _true_
emergency care for everyone (just like we have fire and police, right?), but
for non-emergency stuff (which is most of healthcare), people do have time to
shop around and find the best deal for them. The best deal might involve
joining a health club like Aetna or Kaiser (these are not insurance, by the
way), or it might be saving your money in a bank and paying for stuff piece by
piece by yourself, just like we do for just about everything else we need to
survive in this world.

~~~
joe_the_user
_This is a bit of a false narrative. 99% of healthcare is not emergency room,
imminent bleeding out._

Fine, it is a "dramatic illustration" but for even ordinary, ongoing medicine,
the average consumer isn't in a position to evaluate the choices involved,
there a natural advantage whatever health care provider is in the area,
necessary regulation create severe barriers to entry and so-forth.

~~~
wuliwong
I still totally disagree with your narrative. There is no natural monopoly in
health care. New hospitals continue to be built all the time. You can goto
your CVS and see a doctor if you want. There are tons and tons of choices and
competition.

>the average consumer isn't in a position to evaluate the choices involved

Why? Once again I completely disagree with this narrative as well.

~~~
pwinnski
The narrative is accurate.

There are many, many, many examples of people who go to a hospital and ask at
every point whether the services being provided are "in-network" for their
insurance company, and yet still find themselves being billed for "out-of-
network" services because of some assistant to a doctor or someone who was
consulted outside the patient's presence. It's a minefield, even for people
with patience and a clear head, which doesn't describe the majority of people
seeking medical care.

A quick search turns up a few examples: \- [http://www.news-
gazette.com/news/local/2019-01-20/wondering-...](http://www.news-
gazette.com/news/local/2019-01-20/wondering-why-you-got-unexpected-out-
network-medical-bill.html) \- [https://www.consumerreports.org/health-
insurance/states-work...](https://www.consumerreports.org/health-
insurance/states-work-to-limit-out-of-network-medical-bills/) \-
[https://www.prlog.org/12766040-hbma-adopts-policy-
framework-...](https://www.prlog.org/12766040-hbma-adopts-policy-framework-
for-unexpected-out-of-network-medical-bills.html)

This is a very common issue, so common it is receiving legislative attention.

~~~
krupan
Everyone agrees that this is a problem. The debate is about _how_ to solve the
problem. One side says, "the government should just make our decisions for
us." The other side says, "the government should intervene enough so that
consumers have the information they need to make informed decisions on their
own."

~~~
pwinnski
Everyone agrees that this is a problem... apparently excepting the commenter
to whom I was responding.

Oversimplifications don't serve anyone, and mischaracterizations are unhelpful
and unwelcome.

------
PaulHoule
Look at Foucault's book "Birth of the Clinic" to see why the wealthy need less
wealthy people to get health care to drive the volume that makes possible the
services that the wealthy can afford.

For instance, if you were a billionaire maybe $1,000,000 for a coronary artery
bypass operation would seem like a good deal.

Doing those operations in volume lowers the cost but it also makes it possible
for doctors to get experience that makes the operations safe and effective.
Studies have shown that the main factor for survival in CABG surgery is how
many operations are done a year by the doctor and the clinic.

Similarly, you have to treat thousands of people to prove a drug is safe and
effective. You just couldn't have advanced treatments for the ultra-rich
without these treatments being developed and tested on a large volume of less
wealthy people.

~~~
qntty
This is a really interesting perspective. Do you know if there's research on
this?

~~~
zwkrt
You mean like Foucault's book on the subject?

~~~
qntty
I'm guess I mean I'm interested in recent U.S. data, maybe compared to recent
data from countries with universal healthcare.

~~~
PaulHoule
It's not a "versus" thing.

The U.S. healthcare system encourages the average person to spend a lot more
on health care than they would otherwise.

If it wasn't for health insurance (private or public), very few people could
shell out for $250,000 worth of cancer treatment at end of life. Either they
would go without, or the market price would be less.

~~~
qntty
I'm specifically interested in whether universal healthcare improves the
quality of healthcare for everyone through this increased experience effect. I
don't see the connection with what you're saying.

~~~
PaulHoule
It's not "universal healthcare" it is "insurance" which is fundamentally a
mechanism that makes people may more than they would otherwise.

[https://www.thriftbooks.com/w/medical-industrial-
complex_sta...](https://www.thriftbooks.com/w/medical-industrial-
complex_stanley-
wohl/1704242/?utm_term=1101002859890&mkwid=7iRpvLeX%7cdc&pcrid=11558858262&utm_campaign=Bing+Shopping+%7c+Business+&+Investing&utm_medium=cpc&msclkid=d053ddce37381ecb5d3d8114f9fa1539&utm_source=bing#isbn=0517553511&idiq=10515988&mkwid=7iRpvLeX%7Cdc&pcrid=11558858262)

~~~
qntty
Again, not really interested in differences in healthcare costs, but
differences in healthcare quality.

------
seanmcdirmid
Yes.

It is crazy that people who get their insurance from an employer get a tax
break (indirectly), while those that purchase it on the individual market do
not. Also, it messes up the risk pool: more affluent people who get their
insurance from work are bound to be more healthier than the poor schlubs who
are not affluent enough to get insurance from their job. As an insurance
company, I could get away with charging group plans much less than individual
plans.

Switzerland, which is basically where the heritage foundation copied what
would become RomneyCare/ObamaCare from, does not allow for group plans. You
simply don't get your insurance from work, everyone is shoved into the same
individual plan market (with some weird probably overthought exceptions, like
Post docs....). This very important aspect is missing from the ACA, but would
be impossible to remove politically, full on universal healthcare is much more
likely.

~~~
mieseratte
Something else I don't quite understand is why plans have drastically higher
rates between tiny private-company and ACA bought. Lost my job at a small
company, only three people with insurance, and wanted to purchase the same
silver-level insurance through the ACA. I could've, for over 3x the total
payment for the private plan. Even the lowest-level catastrophic was still
$100 more than the total cost of the silver plan.

Then there was the dental. Same plan, same dental insurer... but hey guess who
gets a 6-month waiting period on that filing?

~~~
gowld
Why is there a waiting period on a filling? Any dentist can do that.

~~~
zaroth
Not waiting for the dentist, waiting for the coverage. With a new dental plan,
if you didn’t have dental before, you can get cleanings but not other work
covered for the first 6 months.

Otherwise since most dental work is not an emergency, you would pay for one
month of dental insurance in a year you had any work needed, and pay out of
pocket for cleanings.

If you had prior coverage and are just switching plans because of employment
changes, then I believe the waiting period is waived.

We used to have the same thing with “pre-existing conditions” in health care.
You needed “prior credible coverage” to be able to get treatment for an
existing condition in the first 6 months of a plan. Again, it’s to prevent
people from only buying insurance after they get sick.

------
olliej
Yes.

The bigger issue though is the impact on free market prices as the free market
requires competition, but employer group plans force everyone into whoever
their employer has chosen - and the employer cost selection is different from
that of the employee.

It also drastically impacts the ability for people to create new businesses as
getting the required standalone health insurance is exceedingly expensive -
again because individual insurance purchasers are not the primary customers of
health insurance companies.

At least Obamacare/ACA meant that insurance companies couldn't deny on the
basis of pre-existing conditions.

I used to have a coworker that claimed all that was needed was to raise the
maximum income for medicare and that would magically solved healthcare.
Ignoring entirely that private health insurance companies could choose to deny
coverage. My (now) wife literally was unable to get insurance - she was deny
by literally every insurance company in CA because she had donated a kidney,
and it turns out having a single kidney is a preexisting condition. This was
despite her donating a kidney saving an insurance company money.

~~~
gowld
> This was despite her donating a kidney saving an insurance company money.

Did she donate the kidney to someone covered by the same company?

~~~
olliej
No, but that company also declined to cover her.

------
sailfast
Compared to what? Nationalized insurance? Nationalized insurance plus
inclusion of private clinics?

I would argue the lack of transparency in the marketplace and the inability
for anyone to make an informed choice of hospitals or what it will cost them
(the linked article seems to indicate the consumer has a choice to go to a
"nice" hospital or a "not so nice" hospital, but most times we don't have the
choice when we need care - it's close to our home. The times we do have the
choice (sometimes for birth, cancer treatment, etc) is where you see hospitals
investing heavily to get high margin services from consumers.

Does Employer-provided care make medical care unfair? One could argue that
employer-provided care with the tax incentive might lead to better resources
for an employed person electing that care, but any time money is involved you
will likely get better care. EDIT: More succinctly - There will always be some
inequality / unfairness in care because there will always be inequality of
wealth. I'm not sure explicitly here that employer-provided is the problem or
that any subsidized care will create this kind of inequality.

I'm not sure you can argue effectively that granting the same medical care to
all as a matter of law will fly because people will always find a way to get
better care if they can afford it. Does employer-provided do this at a larger
scale? Maybe?

The best way to ensure fairness and efficiency is to get the data out there
and available, and make healthcare more like a market instead of a black box.

~~~
jon-wood
> I don't think you can argue effectively that granting the same medical care
> to all as a matter of law will fly. People will always find a way to get
> better care if they can afford it.

I’m not sure anyone is arguing that. In almost any country with single payer
health care you’ll also find a thriving market in private health care, but
they’re typically competing on things like providing private rooms and maybe a
shorter waiting list rather than whether you get to live or die.

~~~
s_y_n_t_a_x
It's not live or die in America, in the worst possible scenario you may go
into a deep debt, but they won't kick you to the curb if you're dying.

~~~
cyphar
Nope, it's definitely life-or-death.

According to a 2009 study, 45000 people die annually due to lack of health
insurance in the US[1]. Due to the ACA there are now more people who are
insured but it's still a massive segment of the US population (not to mention
that healthcare plans have been covering less and less over time).

The number of people who die due to lack of healthcare is _ZERO_ for countries
that have universal healthcare.

 _Fourty. Five. Thousand. Every. Year._

[1]: [https://news.harvard.edu/gazette/story/2009/09/new-study-
fin...](https://news.harvard.edu/gazette/story/2009/09/new-study-
finds-45000-deaths-annually-linked-to-lack-of-health-coverage/)

~~~
mikem170
>The number of people who die due to lack of healthcare is ZERO for countries
that have universal healthcare.

The design of any health care system needs to acknowledge the fact that people
are going to get sick and die even with an unlimited budget, and there is not
an unlimited budget.

We can't all get billionaire treatment for our ailments, no matter what system
we have in place. We should be adults and accept that

~~~
cyphar
In universal healthcare systems, the government negotiates prices of
treatments and drugs -- so there are very few treatments that cost so much
that you can't be covered by public (or private) insurance.

Obviously people will still get sick and die, that's unfortunately part of the
human condition. But I reject the argument that life-saving treatments being
impossible to afford by ordinary people is something we should accept.

~~~
mikem170
I didn't mean to make the case that we should forget about the whole thing
because we're all going to die anyways.

It's just that in this whole debate it seems we never have the honest
discussion about how to deploy limited resources - i.e. how to ration care
under a socialized system, or how to subsidize care under a free market
system.

I believe that if we discussed it from this perspective perhaps the two sides
of this debate could find some common ground.

~~~
cyphar
That is a conversation worth having, though I hasten to note that the "limited
resources" discussion (assuming you're talking about money) only ever turns up
when talking about progressive policies such as universal healthcare or free
college.

It's curious that nobody ever complains about limited resources when
discussing increasing the military budget or "corporate welfare" through tax
breaks and bank bail-outs. It leads me to wonder whether it's actually a
significant problem in the first place or if it's just another talking point
(there is quite a bit of evidence that deficit-spending is not necessarily a
bad thing in-of-itself, what matters is what that money is being spent on).

------
codegeek
I run a small business and it costs about $2000/Month group premium for a
family of 4 and mind you this is the discounted group rate. If you buy similar
insurance individually, you will pay over $2500/Month. So give or take, $25K
per year per family/employee. Yes the employer gets a tax deduction but if you
really think about it, i would rather offer the employee say $35K extra and
take a hit in Payroll taxes while the employee gets so much more money for
themselves. If only, health insurance was not a scam in this country.

------
danans
Aside from the health care system, it arguably makes the general job market
less efficient, by tying people more strongly to jobs that provide good health
insurance, especially for people with chronic health conditions, or people
with families.

It makes those people less likely to switch jobs, or start new self-employed
projects of their own.

~~~
inthewoods
This. I'm amazed that no one the liberal side of single payer has made this
argument: single payer would help create more small businesses.

~~~
arcticbull
I've been working in my little corner of the world to re-frame the
conversation. Socializing medicine isn't about restricting your freedom to
choose your physician, it's the freedom _from_. Freedom from fear of losing
your job, freedom from fear of having to change your doctor if you do, freedom
to pick _any_ doctor (they're all in-network), freedom from fear of starting a
new business, freedom from fear of death and bankruptcy if anything goes wrong
-- and it does, to all of us, eventually. Socialized medicine is freedom, and
private medicine just isn't.

~~~
turk73
If the US goes "single payer" aka "paid through taxes" I'm retiring at
whatever age I am when that goes into effect. I would have enough money to
retire early except I can't estimate future health care expenses.

I tried to downshift in 2017 but ended up having a $1400/mo health ins.
payment for my family and me and that was more than my mortgage, which was
about $650/mo. At least with the mortgage you know your future costs. I have
since paid off the mortgage, so if we stay put, I have only property taxes to
worry about.

Now, the last question is: What will taxpayers bearing the cost of everyone'se
healthcare do to my taxes? The US is $21 Trillion in the hole and counting. I
won't be paying much income tax, only taxes on capital gains and dividends.

My only other concern is that food prices keep rising like crazy, so do things
like car insurance, homeowners' insurance, bills, etc.

I don't like private health ins--I work at a major provider and I know full
well how billions get wasted. However, I think government taking it over is
going to be the worst thing the US has seen since probably the Civil War. I'm
certainly not paying for it all, you can go figure it out for yourselves.

~~~
marknutter
You can do this today, though. Retire now and your income will drop to the
level where you can qualify for the ACA.

~~~
arcticbull
Common misconception. Medicaid kicks in when you’re down on your luck but
they’ll try and recover their costs by taking a lien against your _house_.
It’s the ultimate cruelty.

~~~
usaar333
Only if you are permanently institutionalized is that a concern.

~~~
arcticbull
A multi-hundred thousand dollar lien for someone who's already too low income
to afford medical insurance? Where exactly do you think they'll get the money
from?

~~~
usaar333
The house equity? This is for people who are terminally ill; the costs are
coming from the estate.

~~~
arcticbull
And if they recover? You know in every other country in the OECD if you get
sick, you go to the hospital, then they cure you and you walk out. That’s it!
No liens, no debt, no bankruptcy. If you give it a chance you might just like
it and if not, you can always go back.

~~~
usaar333
If the person returns home, they release the lien:
[http://www.nls.org/Disability/MedicaidMedicare/MedicaidLegal...](http://www.nls.org/Disability/MedicaidMedicare/MedicaidLegalInformationLetters/MedicaidLien)

Do all other OECD countries cover nursing homes for free until death? That's
the case when liens apply - not hospitalization.

[https://www.aarp.org/health/medicare-
insurance/info-1996/are...](https://www.aarp.org/health/medicare-
insurance/info-1996/aresearch-import-629-D16443.html)

I don't think it is entirely unreasonable that medicaid - a medical program
for poor people - has the right to put a lien on someone's estate. Normally
people on medicaid don't even have estates (or else they wouldn't meet the
asset test), but for some reason we don't count house equity for the asset
qualification criteria. Very unfair for renters - this at least somewhat
equalizes things.

~~~
arcticbull
> Do all other OECD countries cover nursing homes for free until death? That's
> the case when liens apply - not hospitalization.

The NHS in the UK does, yeah [1]. In Ontario, end-of-life care is also
provided and long-term care is provided for ~$1800CAD per month if you can
afford it, and it may be free if not via a combination of CPP, social security
and income-based subsidies. [2] In 2002, France introduced universal, income-
adjusted, public long-term care coverage for adults 60 and older [3]. The
Netherlands does too [4]. The rest of the OECD I'm not sure. Most developed
systems do offer something.

The health system really is better pretty much everywhere else in the OECD.
And remember! _Every one of the systems I mentioned_ spends _less_ per capita
than the US. In some cases like Canada _half_.

> I don't think it is entirely unreasonable that medicaid - a medical program
> for poor people - has the right to put a lien on someone's estate. Normally
> people on medicaid don't even have estates (or else they wouldn't meet the
> asset test), but for some reason we don't count house equity for the asset
> qualification criteria. Very unfair for renters - this at least somewhat
> equalizes things.

While I don't believe in inter-generational wealth I'd argue this furthers the
cycle of debt and poverty by taking an estate away from those who could most
benefit - the poorest.

[1] [https://www.nhs.uk/conditions/end-of-life-care/hospice-
care/](https://www.nhs.uk/conditions/end-of-life-care/hospice-care/)

[2] [https://www.ontario.ca/page/get-help-paying-long-term-
care](https://www.ontario.ca/page/get-help-paying-long-term-care)

[3]
[https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4462881/](https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4462881/)

[4] [https://www.researchgate.net/publication/304653227_Long-
Term...](https://www.researchgate.net/publication/304653227_Long-
Term_Care_Insurance_in_the_Netherlands)

------
wpdev_63
No but the regulation and the protectionism does. My father recently flew to
los algodones, Mexico for dental work that included bone graphs, tooth
pullings, bridges etc. throughout his whole mouth for around $2k. The estimate
for the same job here costs at least $15k.

I am really surprised there aren't any online price arbitrage websites for
healthcare. You could pay a few pennies to fly across the world to get
competitive healthcare at a 1/10th of the cost it would be here.

------
speeder390
Yes it's a vicious circle. If you have any type of illness mental illness and
have poor work history or worse currently unemployed then it is tough to
impossible to find a full time job with insurance. I am 43 essentially
unemployable due to a poor work history, on mass health which is second class
coverage. The newest and better anti depressants are not covered so I continue
on Prozac, Lexapro which make me unmotivated and indifferent.

------
User23
The insurance industry is what makes medical care unfair and inefficient. So
long as we allow health care to be a rentier cash cow nothing is going to fix
this. Not the “free market” and not sticking government with the bill.

------
alkonaut
I have single payer healthcare _and_ a healthcare insurance as a perk from my
employer. It cuts waiting time to see specialists for some conditions from
some times many weeks to one or two days. It cuts waiting times for surgery
from 90 days in the public system to 20 with my private insurance. That’s it.

I believe this is around $400/year of which around half will count as a
taxable benefit. I think it’s unavoidable that there will be a market for this
type of premium services, and I don’t mind. The public healthcare has to
operate efficiently on cost so doctors and equipment needs to be fully
utilized and patients thus need to queue. A doctor I can se within 24h doesn’t
have a full schedule, so is likely an underused - and thereby a luxury -
service.

Whether a healthcare system is “fair” isn’t a simple question, but whether
it’s _sane_ can be answered by a few test questions such as “can a contracting
a serious medical condition eve be a financial disaster?”.

------
ademup
The Walmart/Whole Foods analogy is so completely inappropriate to this topic
that I would say it's "Not even wrong". The author placed it literally at the
heart of their article (paragraph 5 of 10) and after positing it, concedes
"Such a low-cost alternative does not exist for most of medical care." I wish
I could say I "see what they were trying to do here" but honestly am too
confused by it. Are they seriously trying to clarify basic economics? The
prior paragraph was basically "People like having better options when they can
afford them".

Don't get me started on them using the Mean(!!!) household GDP of $155,000.
(just to clarify: using the mean here dramatically misrepresents the average
American because the mean includes billionaires. the median for 2017 was
$61,372)

~~~
TheBeardKing
The author was using it to illustrate how broken the market currently is:

>Of note, there are more than 10 Walmart stores for every Whole Foods store.
The opposite is true for medical care as most physicians and hospitals strive
for high standards and very few concentrate on lowering costs.

That puts things in perspective for a layperson - if 9/10 grocery stores were
Whole Foods, the 1/10 Walmart would not be nearly enough to serve the poor
population.

------
lordnacho
If you think about it, insurance is there to protect you when something
unlikely nonetheless occurs. Having your house broken into, your car stops
functioning, or as in this case, getting ill.

So for the user (as opposed to the insurance company), the value of the
insurance is not to on average be covered. The point is to always be ok if you
get ill.

Where I'm getting at is that employment is a thing that isn't always a given.
You're going to be between jobs at some point in your life, and you don't want
a potential huge bill to wipe you out financially. Even if it is just for a
short period, it ought to worry you that you aren't covered.

I get the feeling most of the debate just glosses over this with the average
case, which is that most people are going to be just fine not being covered
for a few months.

~~~
HBKXNCUO
>You're going to be between jobs at some point in your life, and you don't
want a potential huge bill to wipe you out financially. Even if it is just for
a short period, it ought to worry you that you aren't covered.

Anyone who loses health insurance coverage due to losing their job has the
option to buy COBRA within 60 days of losing their health insurance. If they
do buy COBRA, it is retroactive to the day they lost their health insurance.
So you really do not need to be worried about being wiped out (unless the cost
of COBRA would wipe you out) as long as you get a different job within 2
months.

~~~
ken
I've been in this situation and bought COBRA. It was a mistake. It's not
nearly as good a deal as it sounds like. It's really expensive! It was double
what I pay as an individual.

Sure, it probably had some additional benefits that my basic plan doesn't,
because my employer got the extra super gold plus plan, but if you're only
buying it for a few months to avoid being wiped out in case the worst happens,
then you probably don't care about that.

My recommendation is to never buy COBRA, unless there is a specific element of
the plan that you need, and you have a short timeline to getting a new full-
time job with comparable coverage. Otherwise, it's just hundreds of dollars
extra you're spending, for features you don't need, right at the time when
money is tightest.

~~~
HBKXNCUO
>but if you're only buying it for a few months to avoid being wiped out in
case the worst happens, then you probably don't care about that.

Right, as I said though, the coverage is retroactive to the day you lost your
health insurance. So if you have a heart attack a month and a half after
losing your job, you can buy COBRA after having the heart attack, and you
won't have to pay for the heart attack.

~~~
lordnacho
What if you're unconscious for a long time?

~~~
HBKXNCUO
Hopefully your spouse will sign you up.

------
krupan
Whenever this debate comes up I substitute basic medical care with basic food
or shelter. We don't have insurance for those, but we do have insurance for
rare and expensive things related to them, like house fires, and disability
insurance so we can still buy food if we can't work. Certainly those types of
insurance should be available, heck even government provided if we want, for
rare and emergency medical care. But we don't buy Kaiser or Aetna food
insurance. Employers (mostly) don't provide housing. Why does medical care
have to work this way?

Similarly, we don't have socialized single-payer food or housing (though
countries have tried that). Why do we think that is the only solution for
better medical care in America?

~~~
jwbwater
Healthcare is different. If you get diagnosed with a chronic illness you will
have it, and high healthcare expenses, for the rest of your life. If your
house burns down that does not mean your house is more likely to burn down for
the rest of your life.

------
zaroth
Per the article, $3.5 trillion in US healthcare spending per year is an
average of $28,000 per household.

US _average_ household income is ~$75,000 so to pay for that as a flat tax,
that would be a rate of 37%, just for health insurance.

But state/federal governments already pay for about 40% of all healthcare, and
charge a good deal of taxes to pay for it. If they were paying for _all_
healthcare it would mean adding a new 22% payroll tax to make up the
difference.

~~~
usaar333
So $1400/month needs to be raised? That's less than what my COBRA premiums
were; sign me up!

~~~
zaroth
$28,000 per household only if _every_ household pays $28,000. But that is
never going to happen. It’s going to be percent, and likely a progressively
increasing percentage.

If you had a $1,400/mo employer plan you’d likely be paying a lot more than
$1,400/mo under single payer.

------
mc32
There is a difference between employment-based insurance and employer-based
insurance. One is guaranteed by being employed the other is tied to a given
company.

------
maxxxxx
Yes. It disrupts market forces that may exist. As employee you have pretty
much no choice and the incentives for employees and employees are totally
different.

~~~
s_y_n_t_a_x
You do have a choice of the plan as an employee usually.

And the employer made the choice on the best provider they could get at the
best wholesale price.

The employer is incentivized to get the best provider for the best price to
attract employees.

Employers shop for insurance, employees shop for jobs with the perks they want
(pay, insurance coverage, etc).

EDIT: you're usually given a packet before accepting a job that goes over
their healthcare plans. At least in the two instances I have been in the job
market, I was.

And it's good for the employer to pick a plan that has the best coverage for
the best value because they want to attract employees to them over their
competitor.

~~~
maxxxxx
“employer made the choice on the best provider they could get at the best
wholesale price.”

Best for the employer, not for the employee. In addition when you start a job
you can’t really evaluate health insurance choices.

------
thrower123
The inefficiencies of the health care system are only tangential to whether it
is paid by employer-subsidized insurance, medicare, the VA, the NHS, or by
manna from heaven. The biggest problem is the sheer bureaucracy of the thing.

Fortunately, some gains appear to be occurring to side-step the entrenched
hospital provider networks. A huge number of urgent care centers have begun
springing up, at least in this area, which are perfect for everyday healthcare
needs. I can walk in with no appointment, pay the $25 co-pay, and see a doctor
about bronchitis or poison ivy or get stitches for a minor wound or an x-ray
without waiting an absurd amount of time in an overburdened emergency room, or
waiting a week for my primary-care to have an open appointment. For the most
part, if you tell them what is wrong, they will do what you ask.

It's more like going to get your car fixed, or taking your dog to the vet.

Then again, I'm not on a whole battery of prescription drugs, which seems to
be increasingly unusual, so I don't have to deal with the hassle of going back
regularly to get chronic prescriptions re-issued.

------
ltbarcly3
Yes, anything that hides costs makes a market less efficient. This is so close
to a tautology in economics.

------
beat
_" Employment-based insurance covers approximately 60% (180 million of the 310
million) of insured individuals, but enrollment is highly correlated with
income. In high-income households (family income >400% of the federal poverty
level), 84% are enrolled in employment-based insurance. In low- and middle-
income households (family income from 100% to 250% of the federal poverty
level), only 35% are enrolled in employment-based insurance."_

That line from the beginning just melted my face. I knew it was bad, but I
didn't know it was _that_ bad. Filing this factoid away for later!

~~~
TheBeardKing
Yeah, it's really bad when insurance covers only 60% of even the insured!

~~~
beat
Those who fear "socialized medicine" often fail to recognize just how
socialist our system already is.

------
gojomo
Love some of the bracing analogies employed by this analysis:

* employer-based insurance being a 'Whole Foods'-like product best for the rich that's nonetheless been encouraged by the government, while the 'Wal Mart'-like alternative has been encumbered to the point of disappearing.

* how would we raise our $3.5T health costs _if_ they were war reparations required of the US from a foreign conqueror?

------
throwaway713
I generally agree with the article’s point, but this:

> the contribution made by employers to the premium is exempt from the
> employees’ taxable income. This exemption cost the US Treasury an estimated
> $300 billion in 2018.

is just very disingenuous. Does the lack of an air or sunshine tax also cost
them money?

------
parasense
This is like asking if employment base matching 401k retirement accounts make
retirement unfair to those managing their own 401k. Of course it is unfair,
because life is not fair in nature.

Let's be clear on one thing before starting, it's just a benefit for
employees, just like any other kind of benefit offered, for example the
aforementioned matching 401k retirement fund. Some employers have fabulous
benefit packages, and that is fine. Another related topic here is how medical
insurance used to be mostly about avoiding costly emergency room visits, which
back in the old days would sometimes result in bankruptcy. And, that is fine,
because bankruptcy has replaced debtors prison, and we maintain a civilized
society, but I digress. Insurance used to be a safety net to avoid financial
ruin in the event of an emergency, but somewhere along the way it morphed into
an all-invasive pervasive part of medical maintenance care, I.E. yearly dental
cleanings, or primary care physical exams, etc.. Consider this, Medical
insurance used to be just like automotive liability insurance, it paid out
when there was an expensive accident, but auto insurance does not pay for oil
changes and windshield wiper fluid. Well that is kidna what happened to
medical insurance, it's morphed into a pervasive maintenance plan, and at this
point the maintenance aspect is what is most defining about medical insurance.
Paying that small sum of money every month is super worth it when that ultra
rare accident happens requiring an emergency room visit, but this same model
does not apply well when it comes to maintenance, because then you get people
with pre-existing conditions who are effectively uninsurable, because this is
not a Hippocratic oath, it's insurance (I.E. business) for avoiding bankruptcy
by way of emergency room visit.

Still, it was an interesting perspective on insurance as an employee benefit.
Not sure about the foundations, but the analogies with grocery stores was
amusing.

~~~
ThrustVectoring
As far as 401k plans go, self-employed individual running their own 401k often
have an advantage over employees who have to take whatever 401k plan is
offered by their employer. The downside of not having any other members to
share administrative overhead costs is more than dwarfed by the ability to
ruthlessly optimize for favorable tax treatment on the combined "employee" and
"employer" parts without regards to which entity gets what.

------
rayiner
This is an excellent article, and there are some really important observations
here. Two that stood out to me:

> Emphasis is on specialty and subspecialty care, expensive technology, extra
> capacity to facilitate access (US hospitals have an average occupancy rate
> of 65% compared with an average of 76% according to the Organisation for
> Economic Co-operation and Development), and more and better-quality
> amenities, including space and privacy in the hospital.

These sorts of cross-country comparisons are really important in helping to
understand why U.S. healthcare costs are so much higher. During law school, I
would study at Northwestern's Womans' hospital, which was next door. It was a
beautiful facility, a brand new glass-and-stone mid-rise with spectacular
views:
[https://www.nm.org/-/media/Northwestern/Images/locations/pre...](https://www.nm.org/-/media/Northwestern/Images/locations/prentice-
womens-hospital.jpg). Non-profit facilities elsewhere in the world are often
quite a bit more pedestrian. (You see similar differences in university and
college facilities.)

> Countries that have national health insurance come close to this solution by
> having a flat tax on retail sales or on value-added sales that is initially
> paid by business firms, but is eventually passed on to consumers.

This is an incredibly important point. In the U.S., the "health care debate"
is actually two separate debates. One is about how to structure the health
care system. The other is about income redistribution. While many in the U.S.
want to see the U.S. have European-style medical care, there is almost no
traction for proposals that would _pay for it_ in the same way Europeans pay
for their systems.

The leading proposal for universal healthcare in the U.S. right now seems to
be "Medicare for All." Medicare is paid for by a 1.45% tax on income, with no
cap on the taxable income base. Contrast Germany, where people are required to
purchase public insurance at a cost of 15% of income (half paid by the
employer), but those making above about $70,000 are exempt from the mandate
and tax and permitted to buy private insurance. Or Spain, where health care is
paid for out of the general fund, which in turn is heavily reliant on a 21%
VAT. (If the U.S. had the same mix of income/corporate/sales taxes as Spain,
income taxes would go down a trillion dollars, while sales taxes would go up
two trillion dollars.)

In the U.S., replacing sales taxes with a 20% VAT--the OECD average--would
raise a trillion dollars. Easily enough to pay for universal health care, and
a very typical European way of paying for universal health care. Yet, there
are zero serious proposals in the U.S. for such a measure.

~~~
harryh
If you're going to say that German insurance costs 15% of income, you need to
also say that Medicare costs 2.9% of income (counting the employer half) to
make an Apples-to-Apples comparison.

There's also the 0.9% surtax on income > 200k.

~~~
rayiner
Right, good point.

~~~
harryh
Interestingly, this kinda works out:

Medicare spending is ~20% of US HC spending. So if we wanted to expand
medicare to cover all HC spending we'd need to 5x the tax. 2.9% * 5 = 14.5 or
basically what the tax is in Germany.

Obviously lots of caveats to that calculation, but it's a nice "in the
ballpark" sanity check.

~~~
rayiner
Yeah, that’s a very interesting calculation. I’ve never thought of it that
way.

------
speeder390
There is a huge amount of age discrimination. If you are over 40 especially in
most STEM fields, you may accounting especially. Most of the 'auditors' at the
Big 4 look like they are just out of school (college). For a full time middle
class white collar job that provides health insurance,Employers want people
under 40, white and have no gaps in employment.

~~~
turk73
Yup, am mid-40s and already tech employment is a crapshoot in a lot of ways.
Not that the jobs are worth working at other than the pay being good. The
expectations have gone through the roof.

"Oh, we pay you an inflation-adjusted equivalent of 1980s $50K a year so you
should be absolutely devoted to us."

Yeah, whatever.

~~~
merpnderp
In 1985, making $50k would make you one of the highest paid engineers in the
country. Now it's a much more common pay range. Is your issue that pay hasn't
outpaced inflation at a high enough rate?

------
iamaelephant
Common sense doesn't need research and long form writing, it just needs to be
implemented.

------
SrslyJosh
Yes. Next question.

------
pboutros
Ah, the rare exception to Betteridge's Law
([https://en.wikipedia.org/wiki/Betteridge%27s_law_of_headline...](https://en.wikipedia.org/wiki/Betteridge%27s_law_of_headlines))!

------
PopeDotNinja
Yes.

------
throwayEngineer
Insurance is annoying, but Physicians and healthcare workers have a legal
license that drives up costs.

Do we need a 200k/yr gatekeeper to basic antibiotics? Or would an experienced
nurse be able to figure out the difference between bacterial and viral?

Do we need a nurse cleaning patients? Or is that a job for unskilled labor?

Government licencing has gone too far, and has created artificially low
supplies of health insurance workers. This was driven by incumbent healthcare
workers.

~~~
noelsusman
Experienced nurses already prescribe drugs for people. Walk into a random
retail clinic and you will most likely be seeing a nurse, not a doctor. My PCP
is not an MD. She has the legal authority to prescribe me any drug she wants,
including highly controlled substances.

~~~
throwayEngineer
It's not experience, it's a different government license.

Nurse practitioners are a 6 figure/yr job.

~~~
noelsusman
A license that takes half the time to acquire and provides half the salary of
a doctor.

------
zavi
Yes it does.

------
paulddraper
Was disappointed.

From the title was hoping to see employer-based insurance compared against
better market-driven individual-based insurance.

Instead it's yet another privatized vs socialized insurance analysis. (Not
that it's not interesting...was hoping for something new.)

