It's worth remembering that the relationship between health insurance and employment is entirely due to government meddling in the first place.
Up through the fist half of the 20th Century, medical expenses were generally paid individually, or through mutual-aid groups such as churches or fraternal societies. This began to change when the government instituted wage freezes. In that environment the only way for an employer to attract superior talent was to offer non-salary benefits, and the tax advantages of health care made that an attractive one.
Thus, American employers began to offer health insurance as a way to better compensate their workers when the government was trying to interfere with the labor market. As the practice became more common, it increasingly became a point that job hunters would look for. And the rest is history.
If you think that the results of this meddling are undesirable, then you might think twice about giving the same meddlers the authority to muck things up further.
I've read this comment 4 times now and I can't find anything constructive in it. People are manifestly restrained from entrepreneurship because of private health insurance in the US. You don't like the idea of the government stepping in. Fine. What's your suggestion?
The post is pretty clear to me: Healthcare in the US is in the state it is now because of the way government treated it (via regulation and taxation). The GP's link documents this very well.
>You don't like the idea of the government stepping in. Fine. What's your suggestion?
Sincerely out of ignorance, are there (or have there ever been) any free market health care systems which have been considered widely successful (by the public, not the providing companies)?
Taxes go down and the deficit decreases. Those from Texas can legally buy insurance from companies in Florida or Vermont or wherever they choose. No health care is tax advantaged or disadvantaged - it just is. People can order insurance custom to their needs; a pick and choose model that serves their situation. Healthcare lobbyists flood the street seeking alternative employment. Insurance is bought and sold like cell phone or cable service. Startups become highly tuned to the needs of the market and excel in matching people up with insurance companies and health plans in innovative ways. The market is allowed to operate like it should.
Or, taxes don't change enough to move the needle on health insurance affordability.
We further deregulate the insurance market, and the private insurers of last resort in several locales move to more profitable markets.
Meanwhile, the insurers in the states with the greatest consumer protections move to the venues with the least consumer protections, producing a net decline in health care quality for the entire country. With barriers to interstate insurance removed, the industry is also free to concentrate itself through M&A.
While that's happening, the adverse selection problem with health insurance continues to fester, as our "free market", in enabling "the pursuit of happiness" for everyone, especially 20-something bachelors, cons the whole consumer market into believing they can free-ride into their 40s (or their first child) and then get reasonable insurance, while draining the entire risk pool of all the low-risk patients.
Those same 20-something bachelors show up in emergency rooms, bankrupting themselves over broken bones --- but no problem, by the time they're old enough to care about their credit rating, the only people who will care about this health event are the hospitals and doctors, who will raise rates on everyone else to cover.
At the same time, nothing is done to address the fundamental problem that even in the most consumer-friendly venues, tens of thousands of totally normal families are unable to obtain private insurance coverage at any rate because of preexisting condition coverage.
I think you'd have tons of undesirable side-effects. For instance, anyone with a prior history of an illness could never ever get affordable health care. With car insurance, I can understand the principle (bad drivers pay more), but I just don't think it's ethical to let sick people pay (significantly) more than healthy people.
I think your link between wage freezes and the rise of health insurance is tenuous at best. I was born in an Asian country that traversed a similar path from self-pay to health insurance to (now) public health care - and wage freezes were simply not an issue there.
This has nothing to do with meddling, and everything to do with the fact that self-pay health care bankrupts people, creates sick populations, and insurance is unaffordable to anyone but employers.
It appears that others find this more than tenuous:
http://www.reuters.com/article/latestCrisis/idUSN21171999
1943: The War Labor Board rules that a wage freeze designed to keep inflation in check during World War II does not apply to health insurance benefits, creating an incentive for employers to provide health insurance as a way to build worker loyalty.
Also, it's silly to say that only employers can afford health insurance. Obviously the employer considers the total cost of employing you, including salary, healthcare, FISA taxes, etc. If employers stopped providing health insurance, it's likely that wages would increase (approximately) by the cost of that insurance. Then you'd have that money available.
I agree that this is not a tenuous connection, but you failed to mention in your first post that the wage freeze was during the Second World War. Oil was rationed. Factories converted for war production. The entire economy was mobilized behind the war effort. This is most definitely a case of unintended consequences as relating to health care, but your original post implied that the government just willy nilly intervened with health benefits, when the truth is that it was the side effect of mobilizing the economy for national survival.
What you're saying is true, although I'd also throw in that in addition to the war effort, there was also the Depression and inflation driving this bad legislation. One might draw parallels today with the recession and the likelihood of inflation following unprecedented borrowing, but that's neither here nor there.
In any case, I don't see how the specific motivation is relevant. The point is that the government is bad at anticipating the consequences of its actions. The initial motivation isn't what's important -- the end never justifies the means. The point is that pandering and public choice economics will always cause side effects.
Modern healthcare is a new innovation though, it's hard to compare it to the past. The term anti-biotic wasn't even coined until the 1940s (Penicillin was still new then). It's not big deal to pay out of pocket when there's not much to pay for.
Can you elaborate more? A (cursory) google search didn't really come up with anything about US wage freezes. there was a bit about price controls for 90 days when we came off the gold standard... that doesn't seem like the kind of problem you're describing.
fwiw, it looks like white male lifespan went up a ton in the first half of 20th century, 48 to 66, 37%! vs 66 to 74, just 12%. I'm pretty sure each 1 percent is exponentially harder than the last though.
The change came from wage controls during the Second World War. Ever since, employer-provided care is paid with pre-tax dollars while most private insurance outside of the workplace is paid with after-tax dollars. That's a huge penalty.
Up through the fist half of the 20th Century, medical expenses were generally paid individually, or through mutual-aid groups such as churches or fraternal societies. This began to change when the government instituted wage freezes. In that environment the only way for an employer to attract superior talent was to offer non-salary benefits, and the tax advantages of health care made that an attractive one.
Thus, American employers began to offer health insurance as a way to better compensate their workers when the government was trying to interfere with the labor market. As the practice became more common, it increasingly became a point that job hunters would look for. And the rest is history.
If you think that the results of this meddling are undesirable, then you might think twice about giving the same meddlers the authority to muck things up further.
Edit: here's a bit on FDR's wage freeze and its effect on health insurance: http://faculty.smu.edu/tmayo/health%20care%20timeline.htm