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February 18, 2014

Decoupling health care insurance from employment

The Democrats are waxing enthusiastic about Obamacare having the effect of decoupling health care insurance from employment. Can you believe it; I share their enthusiasm . . . to a point. Health care insurance was originally linked to employers during WWII as a device to get around wage controls. As workers became more footloose in the intervening years, it became more and more obvious that there was a problem. The lack of portability emerged as the problem with people moving and changing employment more readily.

The Democrats view is that ACA actually reduces the need to work. They like the idea that health care insurance has been decoupled from work . . . a little different than being decoupled from employers. This is apparently true, but I do not share their enthusiasm about this. While we all might prefer to become painters and poets and have others provide for our health care (food, housing, etc.), somebody needs to work.

What made insurance work in the past was employer-based groups. These groups kept people insured even thought they developed an expensive health condition. If we diminish the importance of employer-based insurance, we need to find another way to generate groups. I have previously argued that one sort of group that is possible would be based on states. But then you have the problem of portability raising its ugly head. This can be handled by basing insurance on the state of birth. So regardless of where you live, your insurance would be based on your state of birth. Portability solved. Pre-existing conditions solved.

Republicans should take notice that when it comes time to redo the ACA, we need to consider how new groups are to be formed. Perhaps I have been wrong in pressing for groups to be based on state of birth. Instead, we could couple groups to work. One could do this by utilizing unions and other professional associations to be the groups of choice.

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