Why employers won’t cut and run when individuals own health insurance
November 3rd, 2008 | by Brian Schwartz |Something to think about from lawyer Peter J. Nelson:
Most reforms that promote individual ownership [of health insurance] would eliminate the current tax preference for employer-paid coverage and, instead, level the field so that all Americans get the same health-care tax advantages. Sen. John McCain’s plan does this by creating a $2,500 health-care tax credit for individuals and a $5,000 tax credit for families. (Contrary to Barack Obama’s charge that McCain’s plan taxes health benefits for the first time ever, the McCain plan offers a far more generous tax benefit for low- and middle-income America than the current employer-based tax exemption.)
Individually owned coverage would fix big, systemic flaws. When individuals own their coverage, it’s portable from job to job. Portability makes health coverage more secure at a time when jobs are less stable. Moreover, according to the Mayo Clinic, individual ownership “gives patients more control and choice,” and because insurers would now compete for the individual, the insurer would offer more competitive rates and improved service. This is intuitively true. You don’t need a degree in economics to understand that when a family pays for something from its own budget, the family will look for the best deal that best meets its needs.
Nonetheless, many people find it tough to believe that they would be better off taking ownership over their health coverage. …
While I hesitate to bring up 401(k) retirement saving plans at a time when so many Americans lament unparalleled financial losses, the analogy is just too perfect to demonstrate how employers might maintain a vital role even when coverage is individually owned. …
Unlike 401(k)s, health coverage carries an added benefit for employers: Good health care aids employee productivity by reducing sick days and keeping workers more focused. So when the system moves toward individually owned health coverage, don’t expect your employer to abandon you. It’s just not good business.
Read the whole article here.
(Via Paul Hsieh.)
tags: direct purchase insurance, employer-sponsored insurance
