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Job or benefits? Public or Private?
Posted by: McQ on Monday, May 09, 2005

I'm of the opinion that olutions to healthcare and retirement belong with individuals and the private sector, and not the public sector. Per the LA Times, the trend is in that direction, and they don't like it. Reading the article, they believe exactly the opposite should happen:
Across all these fronts, Bush and other Republicans are looking to limit government's financial exposure and shift more of the risk for ensuring pension and healthcare security to workers and retirees in the name of increasing choice.

That's exactly what employers have done for a generation, replacing plans that guaranteed workers a fixed monthly pension with systems that obligate employers to make only a monthly contribution to investment accounts workers manage themselves. On healthcare as well, employers are replacing programs that provided workers a defined benefit with alternatives that promise only a defined contribution.

Bush and other Republicans want to realign the public safety net along the same principles, while Democrats want to maintain, as much as possible, the defined benefits guaranteed by Social Security, Medicare and Medicaid. As the baby boom generation retires, this argument looms as one of the new century's defining political struggles.
Let's talk about health care for a minute. Health care is certainly a need, but it is not a right. And all the high sounding rhetoric in the world that says otherwise is baloney. Rights don't involve, involuntarily, the assets of others. Any 'right' to health care would make exactly that sort of demand on the assets of health care workers.

So what's the practical solution? How do we get health care affordable for everyone?

Get health insurance out of the business arena and out of the public arena. Put it in the same arena that all other forms of insurance are found. If you can shop for car insurance, you can shop for health insurance. The immediate benefits of making health insurance an individual responsibility?

1. Portability. It now no longer matters where you work or for how long (or if you work at all) your insurance travels with you. And that means ...

2. No more preexisting conditions.

3. Pool cost averaging. No longer limited to the pool of those who work at your business, like car insurance it now is extended to the pool of those insured by your insurance company.

And business? Eliminate the cost of administering a health insurance program. No more cost of health insurance and administratino means a more competative business.

Does that mean business can't be a part of a health care benefit? No. Of course not. If they so desire, they can offer some dollar amount toward health care insurance as a benefit. But they don't have to negotiate the contract, pay a part of it, or collect a part of it. They no longer have the cost of adminstering such a program.

The poor? We subsidize them now through an inefficent and costly bureaucracy. Why not instead subsidize an insurance policy they negotiate for their needs?

Which brings us to retirement. Why shouldn't individuals be in charge of their retirement? Why must a company or a government do so?

Granted some will not do such planning. But then that's always been so. But that doesn't then mean that it is the job of employers to ensure the retirement of those who work for them. Nor do I necessarily want them in charge of my pension (or its fund ... they may treat it much like Congress treats the Social Security "fund").

Retirement planning, like most things in this world, should fall on the individual to do. When I consider what was available through a pension plan with the company I'm with (i.e. what I'd draw when I retired if I opted for a pension) and then look at my 401k and its potential (even with the last downturn in the stockmarket), I thank the good Lord for 401ks. And I'm certainly not a financial 'rocket scientist'. The same sort of reasoning says Social Security individual accounts are a good thing.

For the poor, the same answer as for health care. We're going to subsidize them. We always have. But in the long run, individuals taking charge of their health insurance and their retirement makes eminently more sense than having a giant, inefficient and uncaring bureaucracy doing so. It also means individuals will probably spend less on health care and have more for their retirement, because it is they who will be setting the priorities and paying for them.

UPDATE: Welcome to those coming in from Ezra Klein's blog. My answer to his incomplete quoting of my post is here.
 
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Comments
*applause*
 
Written By: zach
URL: http://zra.livejournal.com
Good points—but forget subsidizing the poor part. Don’t the "poor" already pay for auto insurance? They should buy their own health insurance, too.

But then again, I’m a radical who believes in freedom AND responsibility.
 
Written By: Ogre
URL: http://www.ogresview.blogspot.com
but forget subsidizing the poor part

Well yeah, if I could, but in practical terms, that’s not going to happen. There are, unfortunately, too many people that have been indoctrinated with the idea that we have a responsibility for the poor (and don’t mind voting for those who’ll make you pay for them). I’m simply pointing out that until that changes, there’s a better (and less costly) way to subsidize them.
 
Written By: McQ
URL: http://www.qando.net/
this post brings up a good question. why exactly is health insurance in the hands of business? why can’t i just call up a health insurance agent the same i can an auto insurance agent? is that just the way things fell into place, or is it that way because of law?
 
Written By: zach
URL: http://zra.livejournal.com
is that just the way things fell into place, or is it that way because of law?

As I recall, it was a result of WWII wage controls. Businesses were looking for another way to attract top people and began offering medical coverage as a benefit. So in answer to your question its the way things fell into place because of a law temporarily controlling wages.
 
Written By: McQ
URL: http://www.qando.net/
hmmm... so how does a party attempt to change that from a policy perspective?
 
Written By: zach
URL: http://zra.livejournal.com
forget subsidizing the poor part. Don’t the "poor" already pay for auto insurance?
Think about how much of their income is eaten up paying for car insurance (unless they have access to public transportation). Then how much goes for housing, utilities, food, and clothing. Plus they’ll need to pay for health insurance and retirement. It’s pretty obvious that the immediate needs will be paid first with little if any being left over for health insurance and retirement savings.
 
Written By: JWG
URL: http://www.qando.net
Zach,
why can’t i just call up a health insurance agent the same i can an auto insurance agent? is that just the way things fell into place, or is it that way because of law?
For health insurance things fell into place that way. However, you bring up an interesting point regarding those types of insurance that are government mandated (e.g. workmen’s comp.) and even provided (e.g. unemployment or FUTA). On that last point I have often wondered whether this, especially, should be the responsibility of the worker himself to insure his own income in the event of an unforseen layoff, firing, ST disability, etc. I have heard, anecdotally, of employers who intentionally "lay off" workers for 3 months out of each year so they can collect unemployment payments off the employer’s payroll only to "rehire" them shortly thereafter. Something tells me that a private insurer might be more interested in identifying fraudulent practices than a government program.
 
Written By: D
URL: http://
why can’t i just call up a health insurance agent the same i can an auto insurance agent?

There’s nothing stopping you from obtaining your own health insurance. You can find them in the Yellow Pages or online. I’ve bought my own, there’s nothing magical about it.


One point on the pre-existing conditions: isn’t forcing a health insurance company to cover pre-existing conditions a bit like forcing a fire insurance company to insure a house that’s already on fire? Before I get flamed, I’ll point out that some of my wife’s illnesses are not covered by our current insurance because they were pre-existing conditions; I pay for those treatments out of my own pocket.

If the premiums were set the same as in auto insurance—higher rates for assigned risks, some companies refusing to cover higher risks while others specialize in it—maybe I’d go along with it.

What puzzles me is why people don’t think of health insurance the same way that they’d think of any other kind of insurance: a policy to protect them from a financial loss they can’t afford to take. But I don’t see the mind set changing any time soon.
 
Written By: Steverino
URL: http://steverino.journalspace.com/
One point on the pre-existing conditions: isn’t forcing a health insurance company to cover pre-existing conditions a bit like forcing a fire insurance company to insure a house that’s already on fire? Before I get flamed, I’ll point out that some of my wife’s illnesses are not covered by our current insurance because they were pre-existing conditions; I pay for those treatments out of my own pocket.

Not really, Steverino ... when I said "no pre-existing conditions", the assumption is made that you stay with your original insurance provider, the one you had prior to the medical condition. Its not a pre-existing condition to them. And since its portable, it stays that way.

What puzzles me is why people don’t think of health insurance the same way that they’d think of any other kind of insurance: a policy to protect them from a financial loss they can’t afford to take. But I don’t see the mind set changing any time soon.

That’s an excellent point. Instead of paying for large unforseen bills (like other insurance), med insurance is seen as something that pays for everything, to include routine care. That mindset would have to change, but if it did, the savings on med insurance would be quite substantial.
 
Written By: McQ
URL: http://www.qando.net/
Not really, Steverino ... when I said "no pre-existing conditions", the assumption is made that you stay with your original insurance provider, the one you had prior to the medical condition. Its not a pre-existing condition to them. And since its portable, it stays that way.

Sorry for the misunderstanding, McQ. You are quite right: if you never change insurance carriers, you don’t have to worry about pre-existing conditions.

I seem to recall talking about this before (but I’m too lazy to search your archives), but employers could rather easily sign onto a plan like this by converting their benefits packages to what is called (as far as my limited memory serves) a Section 125 "cafeteria-style" benefits package. In it, the employer gives so many dollars pre-tax to the employees, who can then buy whatever insurance suits them. If the employee chooses no insurance, he gets the cash in addition to his salary. In its current incarnation, employees are limited to choose from the plans their employers offer, but I can see expanding this plan to allow any worker to pay for his private insurance with those pre-tax dollars. I don’t know whether this can be done by putting the money into an MSA, but it might work that way.

Barring that, I could also see making health care costs fully deductible from income tax. Take them straight off gross earnings, with no Schedule A limitations.

We’d need some way to transition to this scheme, especially for people with current conditions. Perhaps there’s a market out there for high-risk medical insurance?
 
Written By: Steverino
URL: http://steverino.journalspace.com/
One point that came to mind for me was that health insurance is currently regulated in some very strange ways. For example, when I went shopping for health insurance for myself and my family, I was told that I was uninsurable due to a medical condition I had. I asked if they could insure just my husband and infant daughter, but they said the law required them to insure the whole family or not. Evidently some well-meaning people had passed a law that wouldn’t allow health insurance companies to insure everyone but the disabled kid in a family, but it had the effect of making my entire family go without health insurance. There are lots of other baffling things, like not being able to purchase pregnancy riders in our state, even though you can purchase them in other states. We’d have to do something about this kind of regulation if we want to open up the market.

Also, I’d be interested to know what McQ would propose to do for low-income people who have a condition such as Type I Diabetes. I’d suspect that in a market where people are insured at varying rates, that such people would find health insurance prohibitively expensive. You proposed that government could subsidize the health insurance premiums of the poor. Under your system, then, would the government subsidize the premiums of people in such a situation in a larger amount than other poor people? Would there be "uninsurables" like myself? If so, what would be done about them?
 
Written By: Wacky Hermit
URL: http://organicbabyfarm.blogspot.com

 
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