The GOP Plan to Kill Employer-Based Health Insurance

Mabel Goodwin, forty-five, is examined by a woman doctor at the employment office of the Bell Aircraft plant.  Our Employer based health insurance has its roots in World War II. Library of Congress photo.

I don't know what worries me more, the fact that after eight years, Republicans don't have any single plan as they rush to replace the Affordable Care Act, or the plans that they DO have all involve higher out of pocket costs for healthcare and more people losing their insurance.
 
Trump's pick for Health and Human Services is Rep. Tom Price. Like all of Trump picks, he is an extreme conservative who hates the agency that he is being asked to lead.

Rep Tom Price has wanted to get rid of the Affordable Care Act more than anyone.

He also has a plan to get rid of employer based health insurance.

As noted in this morning's Talking Points Memo, there has long been an idea in Republican circles that providing healthcare to employees is a drag on the American economy. Even liberals like me think that our way of providing health care is inefficient, an accident of history that created a convoluted system.

Employee based healthcare came about during World War II. With workers in high demand, offering health benefits became a way for companies to attract and keep employees. In 1943, the government decided that the costs of companies providing this health insurance to employees should be ta deductible.  This was good for companies -- in that they could write off the cost of their contribution to employee health insurance. It was good for employees too as health care became increasingly expensive with new technology.

They problem with that system is that if you lose your job, you lose your health insurance.

The Affordable Care Act tried to offer an alternative, allowing individuals sign up for health insurance even if they didn't have a job. Some found that plans on the individual market where better than what was offered by their employer.

That said, seven times as many people get their health insurance through work than through the Affordable Care Act -- half the living US population gets health insurance that way.

Price's idea make it much more expensive for the employee and the employer to do so, thereby pushing more people out into the individual marketplace to buy insurance.

Employers would lose tax incentives to provide health insurance to their employees -- the amount of taxes they could write off would be capped. That would mean either passing more of the cost of health insurance to the employee contribution -- making it more expensive -- or vouchering a set amount to the employees to go buy their own insurance. Eventually, the idea would be to drive employees out into the individual marketplaces.

This aligns with Rep Paul Ryan's plan to privatize Medicare too. Ryan wants to turn Medicare from an insurance program to a voucher program which relies on individuals to choose their own plans in the open marketplace. Price's bill would allow people to opt out of Medicare and buy individual insurance plans that likely would be attractive because they cost less, but would also likely not cover as much of the healthcare costs.

The problems with that are several:

1) Republicans also want to repeal the individual mandate - the requirement that people buy health insurance. That means young and healthy people won't buy insurance, which makes insurance much more expensive for those who need it.

2) Republicans want to repeal the requirements that health insurance plans have a basic set of things that are covered. That means you would have to choose from a huge menu of confusing plans, pay in for years and never really be sure if your insurance is actually going to cover you when you get sick.

The idea is that, by having more people choosing their own plans -- and by having insurers freed of many of the ACA's regulations -- younger and healthier people will be able to get cheaper, but skimpier plans.
However, that approach comes with its downsides. With younger and healthier people shifting to more meager plans, the risk pools for people who need more comprehensive care -- the older and the sicker -- decrease in size while growing in average cost. For them, Price proposes a high-risk pool set-up by the states, though the amount of federal money he's willing to invest in them is dwarfed by what it's expected they'd cost.
"There's a lot here that is oriented towards separating the cost of people who have health issues from people who don't," Blumberg said.

Employer based health insurance was a way to share the costs of healthcare. The young and healthy pay in, but use less, reducing the cost for the older patients who need more expensive healthcare.

This is all about how the GOP views health insurance. They feel it is an individual responsibility to pay up or suffer. Moreover, their corporatist leanings have them working to reduce the burdens on employers to provide health insurance -- pushing that burden onto the individual. They emphasize "access" and "choice" to indicate that anyone will be able to buy health insurance if they have enough money.

If you don't have the money, you'll get what you pay for. 

You are going to see a lot more high deductible and catastrophic health insurance options on the marketplace and these options are going to be attractive because they will cheap. Yet they won't cover most health care. Indeed, under most Republican plans you and I are going to pay a lot more out of pocket for our health expenses. 

Where as the ACA tried to broaden the risk pools, which reduced the costs for everyone, the GOP plans want to segment the types of insured so insurance companies can charge much higher premiums to the elderly and sick. This at a time when medical bills are already the biggest source of debt -- even for people with health insurance.

"What this does is it helps you when you are young, when you are perfectly healthy. But we don't stay that way," Health Policy Analyst Linda Blumberg told TPM. "The costs go up tremendously and access decreases tremendously when you have health care needs."

That seems to be a theme among all the Republican health care proposals -- put more responsibility on the individual both for the cost of the premiums and the bills when they come due. They all involve the hope that somehow insurance companies become more efficient and less profit driven, which is unlikely to happen. 

Finally, there is the problem of responsibility. What happens if someone doesn't buy health insurance - or if the bargain basement plan purchased by someone with limited or fixed income doesn't cover unforeseen healthcare costs.  

Aside from the return of medical bill bankruptcies -- which decline under the first years of the ACA -- Republicans propose decreasing support for medicaid and medicare with few backstops for the poor, sick and uninsured. 

As I said earlier, I think employer-based healthcare is a drag on the economy, but I differ from Republicans in thinking we should put even more burden on the American people. 

That's because I believe putting individuals deep into debt or bankruptcy to pay for healthcare is a burden on our nation as whole -- a drag on the economy. 

Other industrialized nations don't have medical bankruptcies.

However, that is because other industrialized nations have public healthcare options. 

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Required Reading:
The Accidental History That Created the US Healthcare System NPR
Sara Kliff Read All the Republican Health Care Plans, Here is What She Found, VOX
Price's Bill HR 2300
Obamacare seems to be reducing medical debt NYT
Even the Insured Can Face Crushing Medical Debt The Upshot
Why Americans are Drowning in Medical Debt. The Atlantic