Quote:
Originally Posted by shane88888
How is disentangling health insurance and employment terrible?
It's not per se (see either terrible or already being done right) but what people always overlook when demonizing employer-provided health insurance is that it solves a critical problem in health insurance: antiselection.
tl;dr: Insurance needs healthy people subsidizing the sick, otherwise it doesn't work. Employer-provided insurance is one way to achieve that, get rid of it and you need another way (like a very strong individual mandate)
In order for insurance (of any kind) to work you need to have some people for whom premiums > claims, have some people for whom premiums < claims, and hope you wind up roughly even. The problem is if people are fairly confident insurance is going to be -EV for them, they won't buy it. For some kind of insurance (e.g. earthquake) that's not a problem, because no one has a great idea what their expected earthquake related claims will be. For health insurance though, it is a problem.
I bet you have a pretty good idea what your health care costs will be this year (barring some catastrophic event) right? Yeah, so do most people, and if you sell insurance to everyone individually, the people for whom insurance is +EV to buy will likely buy it, and the people for whom it's -EV likely will not. If that happens insurance doesn't work for what should be obvious reasons.
There are solutions to this problem. Here are some examples:
-Sell insurance to a whole group of people at once, getting both the low and high risk customers
-Screening on the part of the insurance company (e.g. excluding pre-existing conditions, refusing coverage)
-Sell individually with a strong mandate (everyone has to buy it, get the low and high risks)
-Refusing to cover more predictable costs (e.g. well visits, babies)
-Single payer
So I have no strong principled objection to getting rid of employer provided insurance, but doing so unsolves a huge problem that we would need to re-solve, or health insurance wouldn't work.
Last edited by goofball; 02-07-2016 at 03:16 AM.