…the exchanges will get much bigger over time. Part of what’s going on in the United States is that the employer-based health insurance system is slowly unraveling. Both the House and Senate versions of reform consist not only of using exchanges to cover the currently uninsured, but also using exchanges to construct a kind of safety net so that as employer-based insurance continues to unravel, people will land softly in exchangeland rather than crashing into the rough ground of the current individual insurance market. The Senate bill will slightly accelerate the decline of employer-based insurance by slowly phasing out the tax subsidy for such insurance.
That is Matt Yglesias, here is more. Of course if this is true — and it may well be — the composition and nature of the exchanges means everything.
If the government doesn’t tax something that means it is a subsidy?
Just why is it so much more expensive to take out individual health insurance compared to your employer’s option(s) in the US?
Surely in a truly free market these would be largely interchangeable.
Nick,
I’m not an expert, statistically speaking, but in my experience it is NOT much more expensive to buy individual health insurance over the employer’s option. In the last few years I’ve quit two jobs and both times when I bought insurance I paid LESS than what my employer’s were paying. My situation may be an aberration. But I’m just sayin….
Employer based insurance, especially for the smallest groups, is usually rated on the average age, sex mix and location. If you are younger than the average for your group, male and live in an area with lower costs than average for your group, your individual rate should be less than the group rate. And if you were underwritten to get your insurance and are healthy, it should be lower still.
AntiAntiCamper,
I take it you’re relatively young and healthy? A lot of the recently-unemployed can’t say the same.
“Workers ages 45 and over form a disproportionate share of the hard-luck recession category, the long-term unemployed — those who have been out of work for six months or longer, according to the Bureau of Labor Statistics.” ~NYT
Nick – you weren’t misinformed, but the situation is complicated. Thanks in part to regulation, the price and availabilty employer-base health insurance isn’t subject to scrutiny of your medical history. Sufficiently large groups are insured at a fixed price per head set by the insurer and based on statistical composition, because employers form risk pools on whihc health care insurers can do their actuarial jujitsu.
So if you’re in average or worse health for your place of work, or just consume a lot of care, employer based insurance is a good deal. You pay less or the same than you would as an individual and don’t have to worry about exclusions and the risk of recission. If you’re in better than average health or are prepared to accept a large deductible, employer based insurance is a bad deal, because it probably costs more than it would as an individual. But, of course, it still has tax and reliability advantages so its usually worth it anyway.
Another thing to remember is that on the individual market it can be very difficult to get certain types of care covered. Most individual plans do not offer maternity coverage, while most employer based plans do. Also, how preexisting conditions are treated by the individual market versus employer-based market is part of the reason why those of us on the left feel that the exchanges are necessary. Some preexisting conditions seem completely unfair to the neutral observer – giving birth to a child with birth defects, voluntary organ donation, being a victim of domestic abuse, etc. Pooling the individuals is a net loss for single twenty-something males (such as myself), but should be a net gain for society.
It’s really something, and shocking to see such clear evidence that U.S. Congress is there to defend corporate interests, even though I’ve heard about that many times.
It’s hard to understand why people continue to believe in their representatives, or American democracy…
It’s really something, and shocking to see such clear evidence that U.S. Congress is there to defend corporate interests, even though I’ve heard about that many times.
It’s hard to understand why people continue to believe in their representatives.
The only reason we need this safety net is because all the other safety nets the government set up to protect people have had so many perverse effects. Funny, how people think just one more will do the trick. I suppose you could choose to call it a safety net, but it sounds more like a gillnet to me.
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