May 22, 2009

Why It's Broken

Uwe Reinhardt, one of the smartest people writing about health care policy today, has penned a great essay about our employer-based health insurance system and its shortcomings. After pointing out that our current system is the ugly stepchild of Truman-era politics, he discusses three big flaws in employer-sponsored insurance:

• It shields employees from the true cost of health care, which in turn gives them no disincentive to treat their health benefits like an all-you-can-eat buffet. 
  
• It isn't portable. Lose your job and your health care goes with it.
• It doesn't treat all employers fairly. A small employer with a sick employee is going to suffer a much more sizable hit to its balance sheet than a Fortune 500 company with the same sick employee.
  

I'm beginning to see the merits of taxing employer health benefits as a means to fund health care reform. People who like their insurance can keep it, but it will be treated as part of their total compensation package. And if they don't like it or it's not available to them, they have other affordable options. Organized labor is not going to like it one bit, but with a little creativity, they can come up with new perks that employers can more easily afford. Child care. Education reimbursement. Pensions!

Posted by wintermute2_0 at May 22, 2009 06:28 PM

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