With Obamacare all but dead following the government’s embarrassing oral arguments before the Supreme Court, eliminating the possibility of the creation of “death panels”, and unelected bureaucrats deciding what is “needed” health care, some problems will still remain with our health care payment system.
Note the phrase used. It is the health care payment system, not the health care delivery system.
Prior to the Liberal-Progressive-Democrat juggernaut referred to as Obamacare, the majority of health care in this country was paid for by an individual’s employer. These are the infamous “group” policies that we all grew up with. These policies were a flawed attempt (made, I should note, with the best of intentions) to provide something where “one size fits all”.
Some employers did a very good job of negotiating with health insurers. Some left a lot to be desired. Those in the latter group were often smaller firms, where the owners were forced to do all negotiation themselves, and were at a serious disadvantage vis-à-vis the insurers in terms of knowledge at the very least. After all, most of these small employers were knowledgeable about their own business, but as ignorant of the ins and outs of medical insurance as the rest of us. Owning a business didn’t make them omnipotent. So they were forced into a position where a better plan with more coverage would be ruinous for them financially, or they would be forced to require larger and larger contributions from their employees to pay for the policy.
Another systemic weakness in employer provided health care plans is that they are never transferable. If an employee found another job, even if it paid significantly more, the loss of health insurance, and the risk of the insurer in the new company to decide that whatever might be wrong with you, or a family member, was a “pre-existing condition” would make the increased income not all that attractive.
A possible, and to my mind viable, solution comes from the practice among many employers to provide direct deposit of paychecks to the employees bank each payday.
First, health insurers would have to be allowed to cross state borders with their offerings, so that they can form “super groups” of employees across states, industries and business entities.
They would offer employees of any participating company the opportunity to purchase a health care policy at the group rate, the group being defined as all employees that sign up regardless of where they work.
Employers would have to enter an agreement with all these companies to provide access to their employees periodically so that each company can clarify to each employee what benefits and limits are being offered in their particular policy offering.
Employers would then simply advise their employees that they (the company) would contribute $300 (just as an example) toward the employee’s healthcare each month. Single, married, kids, no kids, it wouldn’t make a bit of difference in terms of what the employer would contribute. Each employee gets $300. If a married couple both work for the same employer, the employer would contribute $600. But that money would not be given to the employee directly. It would be sent directly to the health insurer that the employee has selected in the same way that paychecks are electronically transmitted to a bank when an employee requests direct deposit.
If the policy that the employee has chosen from this broad array of choices cost $450 per month, the employer would deduct the $150 difference between the total costs of the employee’s policy and their own $300 contribution from the employee’s paycheck and wire transfer the total $450 to the insurer each month. If by some miracle the employee chose a plan that had a total cost of less than $300 per month (OK, OK, just assume it’s possible for the sake of argument) the company would keep any unspent funds.
Should an employee choose to leave the company, his next employer might offer a different amount of health insurance subsidy, but the employee would never have to change insurers. No penalty for “pre-existing” conditions would apply since the employee would still have exactly the same insurance policy. There would be no waiting period for insurance to start for an employee who was a new hire. His or her insurance would continue uninterrupted. Each employee could select the health insurance plan that best suits their requirements.
In addition, each and every employer would know exactly what their liability would be (since the contribution level is fixed and predetermined), and there would be zero administrative cost to the employer.
Something for everybody.