Why Do We Get Health Insurance from Our Employers Anyway?
By Noreen Alladina • Monday, March 15, 2010 5:08 pm
The answer stretches back to WWII when the government imposed wage controls on firms. Employers, in order to attract workers, began offering non-monetary compensation to weasel their way around these controls. After the controls were lifted, the practice stuck and now we have an outdated tradition that needs to be remedied.
The negative consequences of employer-based insurance range from a loss of efficiency due to people staying in a job because of better coverage to the lack of transparency from the insured not directly paying for medical services. We need a system that eradicates the complications stemming from employer-based insurance.
John Mackey, the CEO of Whole Foods, seems to have it figured out—he has implemented a system where employees receive supplemental healthcare dollars, which they can spend and control on their own. Employees have high deductibles, which incentivizes them to “shop around” for healthcare and spend their money wisely. The money they don’t use on healthcare can be put to other uses from which they derive more utility. This seems to be a logical alternative to Obama’s proposed healthcare reform that has already worked well on a smaller scale.
We should look to Mackey’s model and other similar proposals before the healthcare costs for employers spiral out of control. At the rate we are heading right now, we will no longer be paying primarily for the good we are purchasing, but rather, a majority of everything we purchase will have embedded costs for health insurance. In fact, Starbucks paid more for health insurance for its employees than it spent on coffee beans in 2005 and GM spent more for health insurance than it did for steel, which leaves me to wonder how much of the money we spend actually goes toward paying for people’s healthcare costs rather than the good or service we are consuming.
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We pay so much for insurance because the premiums keep going up. The premiums keep going up because the profit margins keep going up. Doctors and nurses aren't making more money today than yesterday. The CEO of Blue Cross got a 26 percent raise last year-which was only 3.5 million dollars! How can they make large profits off of people's illness. It is just wrong!
>> Nurse March 25, 2010 7:36 pm
Profits lead to competition, which leads to lower prices. It's not wrong to make profits off of illnesses, but rather, that's how the costs of health care will be lowered. When people have incentives (i.e. profit) to create a product at a lower price, then all Americans will benefit from the decreasing prices. Take a look at Lasik surgery as an example. It is not provided by insurance, and its costs have only been lowering the past few years.
>> N. Alladina March 26, 2010 12:36 pm
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