Switzerland Anyone? (Health Care Reform)

[IchabodPlain]

Wildcat has posted his views on health care reform in numerous threads, and I'd like to see some debate on its merits.

They are:

1. Tax health insurance benefits offered by employers. The goal is to untie health insurance from employment, which in a company of 100 people means you have 100 people shopping around for health insurance instead of one person buying ot for 99 others. This will help spurn actual competition amongst insurance providers. A side benefit of this is employers would be gretly pressured to increase employee pay to make up for the loss of benefit.

2. Get the states out of the insurance regulation business. Let the Federal government be the sole regulator of health insurance, far easier to comply with one national standard rather than 50, which will cut down on overhead costs and thus allow for lower premiums. There won't be any constitutional issues because...

3. Insurance companies are then allowed to sell insurance across state lines - interstate commerce! Again, this increases competition because instead of having only a few (in some states as few as 2) insurance companies to choose from the consumer now has dozens. All of which have to offer plans meeting the minimum standards set by the Federal government.

4. While the Federal government won't set the price of any insurance plan, they will require that everyone buying that particular plan pay the same premium as everyone else buying that particular plan. Joe won't be paying $500/month while Harry pays just $250.

5. Insurance companies won't be able to deny coverage for any reason, including pre-existing conditions. This will be made possible because the penalty for not buying health insurance will be set slightly higher than the national average for a plan meeting the minimum requirements. No financial incentives to game the system as I described above.

6. Of course, not everyone will be able to afford insurance. So the Federal government will subsidize your premium on a sliding scale according to income. The poor get nearly 100% subsidized, the rich get no subsidy at all. Everyone else gets a subsidy somewhere in between those extremes.

7. With all the above in place, there would no longer be a need for Medicaid, S-CHIP, and the myriad other federal, state, and local health care initiatives offered nationwide. Overnight, billions and billions of dollars in unnecessary administrative costs are excised from budgets at all levels of government. The entire health care system just got radically more efficient, with a much higher percentage of health care dollars going towards patient care rather than to administering thousands of pages of complex and overlapping rules and regulations.

I think it's a damn good idea myself, for a number of reasons. Everyone is covered, and no one can be denied. Getting health care out of employers hands benefits both the employer (who becomes more competitive) and the employee (portability). Making the health care market national instead of between the states brings costs down and cuts out bureaucracy.

The only thing I could add is increasing out-of-pocket expenses (we are in the bottom quarter of OECD countries in terms of average out-of-pocket expenditures). This would encourage more personal responsibility and curb over-use of resources. In conjunction, strengthen HSA's to accommodate this increase of out-of-pocket expense.

The hardest part to overcome re:health care reform, IMO, is American political distrust of our government[link]. This can be seen as good or bad (I don't care to debate its merits), but it nevertheless makes major reform difficult in the US.

The above proposal has a HUGE advantage over other reforms, such as a single payer system, in this respect because it contains no provision for a public option! No "government take-over of health care" which gets bandied about by many in America (and a few on this forum). Private companies, everyone is covered, expanded choice - what's the fuss?

Of course, I posted this to hear a critical reception of the plan - so poke away! What's wrong with this plan? What would you change? Would Americans accept this type of reform?


ETA: My link is a decade old, but I'd be interested to find some newer statistics on public (dis)trust in government.

 

[Cleon]

1. Tax health insurance benefits offered by employers. The goal is to untie health insurance from employment, which in a company of 100 people means you have 100 people shopping around for health insurance instead of one person buying ot for 99 others. This will help spurn actual competition amongst insurance providers. A side benefit of this is employers would be gretly pressured to increase employee pay to make up for the loss of benefit.

Untying health insurance from employment would be a Bad Idea.

Employers are not going to give their employees raises to compensate; there's no incentive for them to do so. So in addition to other monthly expenses, we'd have to find a few hundred dollars to pay for health insurance.

 

[IchabodPlain]

Untying health insurance from employment would be a Bad Idea.

I don't think so at all. For instance, if you look at wages paid towards employee health care for GM/Chrysler/Ford, it takes up 1/4 of all wages paid to employees. On average, insurance rates for employer-sponsored family insurance has more than doubled. American businesses face a competitive disadvantage globally due to picking up the tab for insurance coverage. Also, small businesses lose out to larger companies for skilled employees precisely because they cannot offer benefits like health insurance.

In addition, Americans potentially lose their insurance coverage if they leave their current job (which they may be over-qualified) and/or pursue a career opportunity which does not offer it. Americans should not be tied to their job for health insurance.

There are also many reasons employer-sponsored care is preferable. Tax rates are skewed in their favor (not taxed on health care contributions, unlike individuals for one), and they can use their scale to receive lower rates due to the number of policies submitted. If the health insurance market were national and coverage were mandated, these issues of scale would be mitigated.

Employers are not going to give their employees raises to compensate; there's no incentive for them to do so. So in addition to other monthly expenses, we'd have to find a few hundred dollars to pay for health insurance.

They may or may not. Admittedly, I don't favor this portion of Wildcat's argument, but he does qualify by saying "would be highly pressured" not "would". The point is, however, that due to the decreased expenditures on health care, prices could be reduced, higher wages could be paid, and/or investment within these companies could increase. Unless there's some void that increased profits go into, of which I'm unaware...

 

[Cleon]

I don't think so at all. For instance, if you look at wages paid towards employee health care for GM/Chryler/Ford, it takes up 1/4 of all wages paid to employees.

I think you'll note that includes retirees.

American businesses face a competitive disadvantage globally due to picking up the tab for insurance coverage.

...Against countries with single-payer coverage. If we switched to single-payer, that disadvantage would go away.

Also, small businesses lose out to larger companies precisely because they cannot offer benefits like health insurance.

Evidence? What do you mean by "lose out to?"

They may or may not. Admittedly, I don't favor this portion of Wildcat's argument, but he does qualify by saying "would be highly pressured" not "would". The point is, however, that due to the decreased expenditures on health care, prices could be reduced, higher wages could be paid, and/or investment within these companies could increase.

And flaming monkeys could fly out of my ass.

Unless there's some void that increased profits go into of which I'm unaware...

Yes. That would be to the company itself. You will note that companies, whether large or small, do not make a habit out of giving away all their profits.

 

[Lurker]

A quick first read through had me agreeing with Wildcat's proposals except for a couple of points.

I doubt companies would be rushing to give their employees raises after they no longer have to carry the cost of helth insurance. From a business perspective that just does not make sense.

Having each individual negotiate for health care does not take advantage of economy of scale. Someone with 1000 potential customers instead of just one can negotiate for better terms. So if everyone is out for themselves, I am not sure that would reduce cost at all.

I'd like to see some negotiation on limiting costs.

I like the Federal guidelines instead of state ones to combat insurers basing themselves in the most corporate friendly state as they start to sell across state lines.

I wonder how much it would end up costing and how much the federal subsidies would cost the taxpayers?

 

[Professor Yaffle]

Surely "the market" will take care of the wage rises. If your company doesn't offer a pay rise to compensate for loss of health insurance, then the best people will go to work or the ones that do compensate for it...

 

[Francesca R]

(What does this have to do with Switzerland, which has a medical care system that is fairly OK and not slated for big "reform"?)

Untying health insurance from employment would be a Bad Idea.

Tying it to employment in the first place was a worse one.

Employers are not going to give their employees raises to compensate; there's no incentive for them to do so.

Competition.

 

[Cleon]

Competition.

And how is that different from crossing your fingers and hoping really hard?

I don't buy it.

 

[Lurker]

Surely "the market" will take care of the wage rises. If your company doesn't offer a pay rise to compensate for loss of health insurance, then the best people will go to work or the ones that do compensate for it...

Yes, you may be right, but this would probably take time. It is not as if we would immediately see businesses raise their salaries. Over time, with competition and assuming a good jobs economy we would see salaries rise but businesses would fight having to do so. Of course until that happens, we would be required to pay for health insurance with no concomitant salary increase.

 

[Cleon]

Surely "the market" will take care of the wage rises. If your company doesn't offer a pay rise to compensate for loss of health insurance, then the best people will go to work or the ones that do compensate for it...

And if nobody offers a compensational pay raise, then...?

 

[Francesca R]

And how is that different from crossing your fingers and hoping really hard?

Oh, because folk (incl employers) respond to incentives.

I don't buy it.

Hope this helps

 

[Cleon]

Oh, because folk (incl employers) respond to incentives.

What incentives?

Hope this helps

I consider that an appeal to bull****.

 

[Beerina]

Untying health insurance from employment would be a Bad Idea.

Employers are not going to give their employees raises to compensate; there's no incentive for them to do so. So in addition to other monthly expenses, we'd have to find a few hundred dollars to pay for health insurance.

Some foolish cynics note the power to tax is the power to destroy, and increasing tax on employers will decrease that benefit, heaving more people into an uninsured category, thus increasing the general whine for government insurance.

If one truly cared, one would get rid of taxes on medical insurance and any costs. This will help people more easily afford it, and get more people insured, and lessen the whine and general clamor for government insurance.


Oh, wait. Nevermind.

 

[Francesca R]

What incentives?

Enough information has been given already (post 6 is more informative than mine)

 

[Cleon]

Enough information has been given already (post 6 is more informative than mine)

That's theory, not information.

 

[Francesca R]

What's this?

And if nobody offers a compensational pay raise, then...?

(BTW there is no particular reason why 100% of the tax insurance premium--if it was lifted--should go to the employees, but some of it should)

 

[Cleon]

What's this?

(BTW there is no particular reason why 100% of the tax insurance premium--if it was lifted--should go to the employees, but some of it should)

So everyone takes it in the shorts, then.

Yes, that's a fantastic health care plan.

 

[IchabodPlain]

I think you'll note that includes retirees.

Irrelevant. The big three are still spending dollars towards health-care for those former employees, period.

...Against countries with single-payer coverage. If we switched to single-payer, that disadvantage would go away.

Or we could untie employers from the health insurance business without switching to a single-payer, which would also make that disadvantage go away.

Evidence? What do you mean by "lose out to?"

Skilled workers want health insurance. Companies which can provide this benefit attract more potential employees than those who cannot.

http://www.insure.com/articles/healthinsurance/employee-survey.html

And flaming monkeys could fly out of my ass.



Yes. That would be to the company itself. You will note that companies, whether large or small, do not make a habit out of giving away all their profits

Argg. Is this really going to go in the "I don't care to understand economics, but corporations are evil" diatribe? Tax incentives, among other factors, dictate that profits will be reinvested into other avenues rather then kept as cash. If the profits are reinvested and they buy new equipment, the economy benefits. If they reinvest them in the form of higher wages, the economy benefits. If the immediate profits are forfeited to lower prices to gain higher sales/larger market share (larger profits in the future), the economy benefits.

ETA: Offering higher wages has a competitive advantage, since if corporation A will pay you 10% more for roughly the same work than Corporation B, then corporation A will attract more potential employees. Thus, it becomes probable among sectors which have many competitors that someone will raise wages to secure this advantage. There is also competitive advantages to reinvestment for new equipment and lower prices.

 

[IchabodPlain]

(What does this have to do with Switzerland, which has a medical care system that is fairly OK and not slated for big "reform"?)

It is my understanding that these reforms would make the US system most closely resemble the Swiss system.

I could be wrong.

 

[Francesca R]

So everyone takes it in the shorts, then.

That's theory not information.