After:
$50,000 wages (since the employer no longer has to pay part of his healthcare costs directly) + $5,000 from the government = $47,000 + $8,000 healthcare
Even if he was breaking exactly even, this reform still has an effect, as it means that all healthcare insurers will be treated equally, instead of giving employer-paid health insurance preferential treatment.
You’re assuming that the employer will pass all of the money it’s saving on to the employee, which will happen when pigs fly, and not before. Even Harriet’s 50% assumption sounds a bit optimistic to me.
According to standard economic theory one is paid one’s marginal value to the employer. Unless the employee is less productive, after a short lag all of the money should be passed on.
No, after a short lag all the money that the employee expects to be passed on should be passed on. Therein lies the rub - people, in general, will not expect to be paid $5,000.00/year more just because their employers are no longer paying that amount to their insurers.
I fully expect that should all this come to pass, employers will nearly all say, “We’re cancelling your health insurance,” and eventually the employees will realize that that was the whole sentence, and that the employer wasn’t about to add “…but you’re getting a raise.”
My husband’s insurance was about $460 a month, pre-tax, for us. When the amount was to go up about $40/month due to prescription costs, we dropped it.
We now have a catastrophic policy with a $10,000 deductable. It’s $223-ish a month. We deposit $250/month into a HSA at our local bank.
Not a huge savings, but the HSA is:
tax deductable
earns interest
rolls over forever
can be used for any kind of expense after age 65
Perfect for us, a middle-class family of four in good health. We’re also considering an AFLAC-like plan that gives us cash for different sorts of things, including a yearly check-up for both the GP and the gynecologist.
Here’s what you’re missing. My job doesn’t have health insurance. My wife is retired, so we get health insurance through her former employer’s group plan, but are responsible for the full premium.
The full premium for us and our child who is still on the plan is $1,100 per month, or $13,200/yr.
That’s in a group plan where we were already covered. Of course, at our age (we’re both over 55 – but still years away from Medicare) a lot of insurance companies would simply refuse to cover us.
Our daughter is 27 and now in good health. However, because of pre-existing conditions, she can’t find health insurance on her own. Money isn’t the problem, insurance companies simply refuse to accept her.
The employer contribution to health insurance premiums is a huge part of insurance being affordable for most families. Take that away, and a lot of people who aren’t young and healthy will find that even a $5,000 credit will push their out of pocket costs too high, or that without a group policy, insurance companies may simply refuse to sell them a policy.
The employer will continue to have to compete in the marketplace for employees. If any employer feels that he can now afford to offer a higher starting salary to attract good employees, then that will happen somewhere. And that will then result in some others needing to act similarly to compete in the job market. And over time salaries will settle at a higher level than before.
There is currently no requirement that an employer offers health insurance. Any employer that does is already free to eliminate that benefit and save, say, $5k per employee. Why don’t they, then? Because they would lose employees to someone offering a better package. It’s just the same as in my first paragraph - the market sets the overall rate of pay and benefits.
You’re right, I lost track of $3000 in there somewhere. Although as I think about it the bigger oversight is that the cost of a family plan is usually placed around $12-14,000.
I also agree that in the long run wages will rise. There are a few caveats, in that employers add some extra value by purchasing a group plan and have maintained insurance to be competitive in ways that wages wouldn’t make them competitive. IOW, providing insurance is not a marginal dollar kind of thing, it’s “lumpy”. Employers also budget in some improved productivity/ reduced absenteeism in terms of what to pay for insurance. So I wouldn’t expect a dollar-for-dollar raise if coverage were dropped.
Still, the big risk with the McCain plan is that you will find yourself in the private insurance market with you or a family member excluded or priced out of the market due to a preexisting condition. Insuring healthy people is the easy part.
Don’t think there is one. There’s a fundamental problem of economics at play here, which is that economists assume that everyone acts rationally, and they don’t. Moreover, sometimes they do act rationally, yet don’t.
“Eh?” I hear you cry…
It’s a question of odds. Many people, particularly young people, are willing to gamble when it comes to their health. If we assume that the likelihood of a twentysomething contracting a terminal disease or sustaining life threatening injuries is 1 in 1,000 (that’s a guess, although since the probability of a given driver being involved in a bodily-injury-causing accident in any one year is between one in forty and one in 100, it’s probably a bit low), and assume that they can pay out of pocket for cold medicine or a trip to the ER, we can say that health insurance probably isn’t worth it for these people, and determine that they are indeed acting rationally by not buying it.
The problem is that if they’re not one of the 999, they’re fucked. They will probably default on their mortgages, credit cards, auto loans, etc., lose their jobs, and so on, simply because of the crushing cost of emergency or long-term care.
From that moment on, they’re probably going to be a drain on the economy. So it’s in our interest for them to have health insurance, even if it isn’t in theirs.
I’ve heard this argument before, but I don’t understand it. If I am a 25 year old single guy, strong long and handsome, and I have no health insurance, then I get into a terrible accident.
So, the ER bill is $30000, let say. How do I default on my mortgage, credit cards or auto loans? I default on the ER bill! I don’t lose my car or house to pay the hospital. Fuck 'em. They get paid last.
Who defaults on the staples in life to pay the outliers?
