On 10/1/06, Neil Schneider <[EMAIL PROTECTED]> wrote:
Robert Donovan wrote: > What we need to do is get from the curent arrangement of doctors, > hospitals, > and patients competing for insurance money to doctors hospitals and > insurance companies competing for the patient's money. To do that, do > three > things, REMOVE the tax exemption for employer provided health benefits > and > REPLACE it with an equal tax exempt status for higher wages to get > employees > demanding higher cash wages to buy their own healthcare, and make ANY > third-party payer health benefits from employer to employee illegal, > period.
I refer you to the very next sentence in my original post. The employer would be the one negotiating with the insurance companies for the policies. They would just be negotiating for individual policies to purchased and owned by the empolyees, paid for with the tax-exempt cash wages the employer would pay them for the purpose. Insurancese companies hold all the cards. And who really believes that an
individual has a better negotiating position than another corporation. If you believe individuals can negoiate themselves a better deal than they now get through their employer I have some beachfront property in Yuma I'd like to sell you.
The individuals wouldn't negotiate the policy. They'd shop for it. Insurance companies hold all the cards under the current system precisely because the third party payer system virtually removes all competition for the individual's money. And yes, I think individuals are smart enough to figure out what is the best deal for them. We do it with every other type of insurance we buy right now. I just bought new car insurance and homeowners insurance online and shopped about five differnet policies. It was convoluted and tedious at times, but very doable. Healthcare should be no different. The reason it is different is due entirely to the fact that there is far less of a market for individual health insurance any more because the business policies are so much more lucrative and, outside of the still very small, restrictively regulated, HSA market, there is little choice or incentive for the employer to shop around for the best policy, only the best price. The tax-exempt status of employer-provided health benefits also encourages focus on price rather than quality. By flipping the tax-exempt status for healthcare via the employer to cash wages, employers are encouraged to pay more money for healthcare to employees directly. Making third-party payer arrangements illegal takes away the profits to the insurance company for these policies and forces them to either start creating individual policies or lose billions in annual profits. Disallowing any exclusive deals between the insurance company and employer and/or the employee for health insurance puts the empolyers in a better negotiating position for group policies at better prices because the insurance companies would know that the business owner and the employees could go down the street to the competition at any time. There is no better mechanism in the world for keeping prices down without creating shortages than that, and it encourages delivery of more service for a given price rather than less, as it is under the current system, to attract and keep new and existing customers. Here's what would really happen with your plan. It would accelerate
the existing trend for mployers to stop offering healthcare as a benefit.
My plan doesn't encourage removal of healthcare as a benefit, it encourages changing it from an in-kind payment to a cash payment of equal value by swithcing the tax-exempt status from in-kind to cash wages. Employees who managed to get better prices on insurance or to reduce their medical expenses would see an increase in net wages, not a decrease. Employers usually have a much harder time reducing cash wages than they do in-kind benefits. That's not to say that employers wouldn't try, but changes in cash wages are immediately and acutely felt by employees, and are ususally the last thing employers reduce to save money. They will usually remove perks and benefits first because their absence is not immediately felt in the case of most workers. Wages would continue to remain stagnant or decline, and the
standard of living for american employers would decline even more rapidly than it is today.
I refer you to my last remarks. RD -- [email protected] http://www.kernel-panic.org/cgi-bin/mailman/listinfo/kplug-list
