There has been a lot of talk about health care in connection with the upcoming presidential election. The main difference between the two candidates is Obama would strengthen the ties between employment and health insurance while McCain would weaken them.
Severing health insurance from employment is the correct policy. Linking health insurance to employment is based on good intentions, but in practice it is a burden rather than a benefit to buyers of insurance, especially those of modest means who the policy is supposed to benefit.
Reasons against employment captive insurance:
- If someone gets a long-term illness while on an employer sponsored heathplan, it may be hard to maintain coverage after a job change. The employee can continue on the plan for 18 months, but then is forced to find other insurance. Health Insurance Portability and Accountability Act (HIPAA) provides protections for someone moving to another group policy, but the protections vary from state-to-state if they are getting an individual policy. Companies understandably don’t want to “insure” against a peril that has already happened.
- Even in the absence of an illness, employer sponsored insurance complicates job changes by adding another complication. This affects the boarder economy by decreasing labor mobility.
- If employees want the benefit of employer contributions but want a different plan, they must lobby their HR department to provide another option. This could affect the group rate on the existing policy, so it’s a complicated decision that takes time away doing work.
- Since group rates are based on the health of the entire group, there is pressure for employers to takes steps to encourage employees to make healthier choices to keep everyone else’s premiums down. This is an unsettling intrusion into personal decisions.
Reasons in favor of employment captive insurance:
- A group of people may be able to negotiate a slightly better rate.
- Some people lack the discipline and wherewithal to shop for insurance and pay their premiums on time. (How do these people buy their auto and property insurance?)
- The group gets considered together so that people with lower health risks pay slightly higher premiums allowing the sick to pay slightly lower premiums than their risk profiles justify. Winners of the genetic lottery of health help pay for the losers.
How to disconnect health insurance from employment while preserving some of the benefits of the employment captive insurance:
- Provide tax credits to families and individuals who earn up to three times the federal poverty line to help pay for health insurance and/or fund their Health Savings Accounts. The credit should be phased out slowly with income to avoid penalizing people for earning more.
- End the 18-month limitation on COBRA.
- Expand HIPAA to force insurers to offer a rider that allows people to transfer to similar insurance plans without regard to preexisting conditions that developed since the original policy began.
- Change the tax laws so they don’t favor employer-based plans over individual policies.
- Research ways to transition socialize risk of genetic illness only. This is in preparation for the day when genetic testing can predict chance of illness based on testing in the first week of life.
The upshot of the policy I’m calling for is to a) help the poor pay for their health care and b) stay out of everyone else’s way so people can take charge of their health care purchases.
I'm not endorsing either presidential candidate with this post.
I'm calling on McCain to address the moral obligation we all have to help the poor pay for their healthcare. I'm calling on Obama to address the moral obligation we all have to take charge of our own healthcare purchases.
