# Tying health insurance to your job is dumb and bad. So why are we still doing it? **URL:** \ **Category:** Great Debates\ **Created:** [October 8, 2014, 7:44am UTC](https://boards.straightdope.com/t/tying-health-insurance-to-your-job-is-dumb-and-bad-so-why-are-we-still-doing-it/700734 "2014-10-08T07:44:09Z")\ **Posts on this page:** 20\ **Page:** 1
**Author:** ![John\_Stamos\_Left\_Ear](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_stamos_left_ear/32/3198_2.png) [@John\_Stamos\_Left\_Ear](https://boards.straightdope.com/u/John_Stamos_Left_Ear)\ **Post date:** [October 8, 2014, 7:44am UTC](https://boards.straightdope.com/t/tying-health-insurance-to-your-job-is-dumb-and-bad-so-why-are-we-still-doing-it/700734/1 "2014-10-08T07:44:09Z")
It’s one of the few things that both conservative and liberal folks can mostly agree on: Tying health insurance to one’s employer is not the best idea. Sure, both sides disagree on what should happen if we untie the two… But it’s such an antiquated (and uniquely American?) notion that I didn’t even know how we would up this way. So [I looked it up](http://online.wsj.com/articles/SB122887085038593345): > [@](#): > > Employers didn’t start offering health benefits roughly 60 years ago because they were experts in medical decisions. It was a way of circumventing the World War II wage and price controls. Barred from offering higher salaries to attract workers, employers offered health insurance instead. The article (from 2008, before Obamacare) also mentions the inadequacies of such an antiquated system. How can we untie health insurance from employers? It seems like doing so would be a win-win for employers and the medical industry. It doesn’t even seem like ti would eliminate health insurers (though they would have to change how they sell themselves). Can we accomplish that or is it so entrenched in how we do business that we can never make the change? ---
**Author:** ![Budget\_Player\_Cadet](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/budget_player_cadet/32/205_2.png) [@Budget\_Player\_Cadet](https://boards.straightdope.com/u/Budget_Player_Cadet)\ **Post date:** [October 8, 2014, 7:54am UTC](https://boards.straightdope.com/t/tying-health-insurance-to-your-job-is-dumb-and-bad-so-why-are-we-still-doing-it/700734/2 "2014-10-08T07:54:29Z")
Two words: _single payer_. You know, the system used around the world that works and is cheaper than what we have? ---
**Author:** ![Grumman](https://avatars.discourse-cdn.com/v4/letter/g/43a26b/32.png) [@Grumman](https://boards.straightdope.com/u/Grumman)\ **Post date:** [October 8, 2014, 7:59am UTC](https://boards.straightdope.com/t/tying-health-insurance-to-your-job-is-dumb-and-bad-so-why-are-we-still-doing-it/700734/3 "2014-10-08T07:59:37Z")
> [@John\_Stamos\_Left\_Ear](#): > > How can we untie health insurance from employers? Offer the same tax deductions for individually-purchased health insurance as are given for employer-purchased health insurance. Easy. ---
**Author:** ![Simplicio](https://avatars.discourse-cdn.com/v4/letter/s/c37758/32.png) [@Simplicio](https://boards.straightdope.com/u/Simplicio)\ **Post date:** [October 8, 2014, 8:03am UTC](https://boards.straightdope.com/t/tying-health-insurance-to-your-job-is-dumb-and-bad-so-why-are-we-still-doing-it/700734/4 "2014-10-08T08:03:13Z")
I think we’ll end up phasing out the old system over the next decade or two. It was already starting to die prior to Obamacare, as fewer and fewer people get their insurance from their employer. By creating alternative ways to get insurance outside of the employer-provided system, and by capping the tax break provided to employers such that it will cover a smaller and smaller amount of total spending each year, Obamacare seems likely to transition the US to a system where most people buy insurance individually. ---
**Author:** ![Wesley\_Clark](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/wesley_clark/32/20581_2.png) [@Wesley\_Clark](https://boards.straightdope.com/u/Wesley_Clark)\ **Post date:** [October 8, 2014, 2:58pm UTC](https://boards.straightdope.com/t/tying-health-insurance-to-your-job-is-dumb-and-bad-so-why-are-we-still-doing-it/700734/5 "2014-10-08T14:58:25Z")
The problem is insurance is so expensive people can’t buy it on their own. For someone in their thirties a policy is $400/month with another 5-6k in deductibles and co-pays. Many can’t afford that, let alone pay for a family policy or a policy that covers people in their 50s. The public sector won’t pick up the tab. Employers are opting out. Individuals can’t afford it. ---
**Author:** ![Great\_Antibob](https://avatars.discourse-cdn.com/v4/letter/g/e47c2d/32.png) [@Great\_Antibob](https://boards.straightdope.com/u/Great_Antibob)\ **Post date:** [October 8, 2014, 3:36pm UTC](https://boards.straightdope.com/t/tying-health-insurance-to-your-job-is-dumb-and-bad-so-why-are-we-still-doing-it/700734/6 "2014-10-08T15:36:45Z")
> [@Grumman](#): > > Offer the same tax deductions for individually-purchased health insurance as are given for employer-purchased health insurance. Easy. Not so easy. Pay will also have to go up accordingly or people will prefer to stick with their employer provided benefit, tax deduction or no. ---
**Author:** ![WillFarnaby](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/willfarnaby/32/514_2.png) [@WillFarnaby](https://boards.straightdope.com/u/WillFarnaby)\ **Post date:** [October 8, 2014, 3:58pm UTC](https://boards.straightdope.com/t/tying-health-insurance-to-your-job-is-dumb-and-bad-so-why-are-we-still-doing-it/700734/7 "2014-10-08T15:58:29Z")
> [@Wesley\_Clark](#): > > The problem is insurance is so expensive people can’t buy it on their own. For someone in their thirties a policy is $400/month with another 5-6k in deductibles and co-pays. Many can’t afford that, let alone pay for a family policy or a policy that covers people in their 50s. > > The public sector won’t pick up the tab. Employers are opting out. Individuals can’t afford it. If their employer is carrying their insurance, they are already paying for it. They simply receive some compensation in dollars and some in insurance coverage. ---
**Author:** ![Mighty\_Mouse](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/mighty_mouse/32/7776_2.png) [@Mighty\_Mouse](https://boards.straightdope.com/u/Mighty_Mouse)\ **Post date:** [October 8, 2014, 4:04pm UTC](https://boards.straightdope.com/t/tying-health-insurance-to-your-job-is-dumb-and-bad-so-why-are-we-still-doing-it/700734/8 "2014-10-08T16:04:14Z")
> [@Great\_Antibob](#): > > Not so easy. > > Pay will also have to go up accordingly or people will prefer to stick with their employer provided benefit, tax deduction or no. Just make the benefit taxable, and people will drop out and into the exchanges on droves. But people are addicted to the hidden subsidy. ---
**Author:** ![WillFarnaby](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/willfarnaby/32/514_2.png) [@WillFarnaby](https://boards.straightdope.com/u/WillFarnaby)\ **Post date:** [October 8, 2014, 4:14pm UTC](https://boards.straightdope.com/t/tying-health-insurance-to-your-job-is-dumb-and-bad-so-why-are-we-still-doing-it/700734/9 "2014-10-08T16:14:08Z")
> [@Great\_Antibob](#): > > Not so easy. > > Pay will also have to go up accordingly or people will prefer to stick with their employer provided benefit, tax deduction or no. If some people prefer to seek their own insurance coverage, employers will begin to offer compensation packages that includes higher dollar amounts and no insurance coverage. Easy. Abolish Obamacare. ---
**Author:** ![WillFarnaby](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/willfarnaby/32/514_2.png) [@WillFarnaby](https://boards.straightdope.com/u/WillFarnaby)\ **Post date:** [October 8, 2014, 4:16pm UTC](https://boards.straightdope.com/t/tying-health-insurance-to-your-job-is-dumb-and-bad-so-why-are-we-still-doing-it/700734/10 "2014-10-08T16:16:00Z")
Nvm ---
**Author:** ![septimus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/septimus/32/410_2.png) [@septimus](https://boards.straightdope.com/u/septimus)\ **Post date:** [October 8, 2014, 4:17pm UTC](https://boards.straightdope.com/t/tying-health-insurance-to-your-job-is-dumb-and-bad-so-why-are-we-still-doing-it/700734/11 "2014-10-08T16:17:35Z")
I certainly agree with OP. HOWEVER, employer-sponsered insurance has one big advantage that disappears if insurance is purchased individually. When a large company insures _all_ its employees, the insurance company need not evaluate risks case-by-case. They know they’ll lose money on some of the insured (people with chronic ailments) but make it up with the healthy insured. When policies are purchased individually (with healthy people having an incentive not to insure at all), insurance companies have to assess each applicant’s health. Government uses tax dollars to provide free education, free police protection, etc. In a rational world, tax dollars would also provide free health care. This option is unavailable in the U.S. because of Socialism. And Benghazi. ---
**Author:** ![even\_sven](https://avatars.discourse-cdn.com/v4/letter/e/dfb087/32.png) [@even\_sven](https://boards.straightdope.com/u/even_sven)\ **Post date:** [October 8, 2014, 4:26pm UTC](https://boards.straightdope.com/t/tying-health-insurance-to-your-job-is-dumb-and-bad-so-why-are-we-still-doing-it/700734/12 "2014-10-08T16:26:58Z")
> [@Budget\_Player\_Cadet](#): > > Two words: _single payer_. You know, the system used around the world that works and is cheaper than what we have? This. ---
**Author:** ![Wesley\_Clark](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/wesley_clark/32/20581_2.png) [@Wesley\_Clark](https://boards.straightdope.com/u/Wesley_Clark)\ **Post date:** [October 8, 2014, 4:48pm UTC](https://boards.straightdope.com/t/tying-health-insurance-to-your-job-is-dumb-and-bad-so-why-are-we-still-doing-it/700734/13 "2014-10-08T16:48:40Z")
The > [@WillFarnaby](#): > > If their employer is carrying their insurance, they are already paying for it. They simply receive some compensation in dollars and some in insurance coverage. We have a labor surplus so what will happen is employers will drop coverage without offering higher wages or assistance to help people buy insurance privately. People in this country are fucked hard and I don’t see a light in the tunnel on this issue. Single payer is a nice idea, but health costs will only drop from 18% of gdp down to 15-16% with Medicare for all (many wealthy nations use mandated private insurance and costs are closer to 10% gdp) . Our health system will still be wildly overpriced. That is what needs to change and I don’t know who or how it would change . Our system needs massive fundamental reform and there isn’t the political will or financial incentive to do it. My hope now is a state like Vermont or California will enact true reform, then I can move there. ---
**Author:** ![JesterX](https://avatars.discourse-cdn.com/v4/letter/j/439d5e/32.png) [@JesterX](https://boards.straightdope.com/u/JesterX)\ **Post date:** [October 8, 2014, 5:03pm UTC](https://boards.straightdope.com/t/tying-health-insurance-to-your-job-is-dumb-and-bad-so-why-are-we-still-doing-it/700734/14 "2014-10-08T17:03:40Z")
The whole debate leading up to obamacare struck me as such a farce. The whole argument was about “how do we reform this system”, when the REAL question was “how do we reform this system without anybody making any less money”. If we resolve ourselves to the fact that someone, somewhere, is going to have to make less money, THEN we can do real reform. So my suggestion is to threaten the “R” word. Regulation. If you tell hospitals, doctors, drug makers, medical device makers, etc. that if they don’t bring their outrageous prices under control we’re gonna start REGULATING your prices and tell you what you can charge. Then it’s just a matter of making every employer pay into a general fund for healthcare for all workers in a state or locality and use that fund to help individuals buy personal policies. ---
**Author:** ![wolfpup](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/wolfpup/32/10618_2.png) [@wolfpup](https://boards.straightdope.com/u/wolfpup)\ **Post date:** [October 8, 2014, 5:21pm UTC](https://boards.straightdope.com/t/tying-health-insurance-to-your-job-is-dumb-and-bad-so-why-are-we-still-doing-it/700734/15 "2014-10-08T17:21:36Z")
> [@WillFarnaby](#): > > If some people prefer to seek their own insurance coverage, employers will begin to offer compensation packages that includes higher dollar amounts and no insurance coverage. Easy. Abolish Obamacare. More likely, as **Wesley Clark** already said, what you’ll end up with is no insurance **without** the higher salaries. “Easy?” More like lose-lose. Regardless, that does nothing about the off-the-chart costs of US health care, which is ultimately all traceable to the unregulated private insurance system, its overhead and bureaucratic waste, and its inability to control provider costs. Obamacare, which you want to abolish, is the first meaningful legislation to take the first small steps to addressing some of the worst of those problems. > [@Wesley\_Clark](#): > > Single payer is a nice idea, but health costs will only drop from 18% of gdp down to 15-16% with Medicare for all (many wealthy nations use mandated private insurance and costs are closer to 10% gdp) . I agree with most of your sentiments but where are you getting the idea that single payer would only drop costs by a couple of percentage points? IMO the best indicator of what US costs would be like under a theoretical single-payer system are the costs in Canada, where cost of living, salaries, medical facilities and equipment costs, and pretty much the whole socioeconomic system, are all roughly similar. [This comparison shows](http://data.worldbank.org/indicator/SH.XPD.TOTL.ZS) that the US spends 17.9% of its GDP on health care while Canada spends 10.9%. Per-capita costs follow roughly the same ratio. ---
**Author:** ![Wesley\_Clark](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/wesley_clark/32/20581_2.png) [@Wesley\_Clark](https://boards.straightdope.com/u/Wesley_Clark)\ **Post date:** [October 8, 2014, 6:06pm UTC](https://boards.straightdope.com/t/tying-health-insurance-to-your-job-is-dumb-and-bad-so-why-are-we-still-doing-it/700734/16 "2014-10-08T18:06:53Z")
> **[Single-Payer National Health Insurance - PNHP](https://pnhp.org/what-is-single-payer/policy-details/)** > > Single-payer national health insurance is a system in which a single public or quasi-public agency organizes health financing, but delivery of care remains largely private. Medicare for all could save 400 billion a year. In our 2. 8 trillion health system and 17 trillion gdp that is a lot of money, but will only reduce medical costs by 2-3% of gdp. European nations do not all have single payer, but all keep costs to within 8-11% gdp. We would still be far more expensive. ---
**Author:** ![GIGObuster](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/gigobuster/32/421_2.png) [@GIGObuster](https://boards.straightdope.com/u/GIGObuster)\ **Post date:** [October 8, 2014, 6:13pm UTC](https://boards.straightdope.com/t/tying-health-insurance-to-your-job-is-dumb-and-bad-so-why-are-we-still-doing-it/700734/17 "2014-10-08T18:13:13Z")
> [@Wesley\_Clark](#): > > [Single-Payer National Health Insurance](http://www.pnhp.org/facts/single-payer-resources) > > Medicare for all could save 400 billion a year. In our 2. 8 trillion health system and 17 trillion gdp that is a lot of money, but will only reduce medical costs by 2-3% of gdp. European nations do not all have single payer, but all keep costs to within 8-11% gdp. We would still be far more expensive. :dubious: > [@](#): > > Single-payer financing is the only way to recapture this wasted money. The potential savings on paperwork, more than $400 billion per year What PNHP is talking about are only about the savings **on the administration costs alone** , IIRC there are other savings that they are not talking about in this article. ---
**Author:** ![Grim\_Render](https://avatars.discourse-cdn.com/v4/letter/g/a87d85/32.png) [@Grim\_Render](https://boards.straightdope.com/u/Grim_Render)\ **Post date:** [October 8, 2014, 6:13pm UTC](https://boards.straightdope.com/t/tying-health-insurance-to-your-job-is-dumb-and-bad-so-why-are-we-still-doing-it/700734/18 "2014-10-08T18:13:48Z")
> [@John\_Stamos\_Left\_Ear](#): > > How can we untie health insurance from employers? It seems like doing so would be a win-win for employers and the medical industry. I am only speculating here, but it does seem to me that there must be some reason why business doesn’t seem particularly interested in getting medical insurance costs off their backs. They are competing with foreign industries that do not carry that weight, after all. In my experience, most people who go into business for themselves are people in their late 30s and 40s who feel they have a good grip of their trade and have come as far as they can working for someone else. Outside of IT that is. IT is still the domain of the young who feel immortal. People in their late 30s and 40s very frequently have families and are starting to feel the first frost in their bones. It is the age when you stop feeling imperishable, and start depending on having health care. Leaving your employment health care behind to start up for your self can’t be a comfortable feeling. So while employment-sponsored health care is a competitive disadvantage versus foreign competition, there are ways and lobbies to impede foreign competition. What it also does is heavily disincline your best workers to shoot off, and start lean new businesses which compete with you _right here._ ---
**Author:** ![GIGObuster](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/gigobuster/32/421_2.png) [@GIGObuster](https://boards.straightdope.com/u/GIGObuster)\ **Post date:** [October 8, 2014, 6:42pm UTC](https://boards.straightdope.com/t/tying-health-insurance-to-your-job-is-dumb-and-bad-so-why-are-we-still-doing-it/700734/19 "2014-10-08T18:42:59Z")
That **Grim Render** is indeed a problem and was noticed before, it is called J[ob Lock](http://theincidentaleconomist.com/wordpress/job-lock-conclusion/) for obvious reasons, but for some reason many conservatives do not notice that that property makes the current system (as some ACA changes are not complete yet) something that only medieval feudal lords would be proud to have. (And many big companies too). There is really less freedom\* in a setup like that and it is one factor on preventing a lot of new companies (Also Known As competition) from poping up and also new jobs. - and that is why I dismiss many conservatives, they really are proud of wilfully ignoring how inefficient, irrational and unjust system we have. ---
**Author:** ![wolfpup](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/wolfpup/32/10618_2.png) [@wolfpup](https://boards.straightdope.com/u/wolfpup)\ **Post date:** [October 8, 2014, 6:59pm UTC](https://boards.straightdope.com/t/tying-health-insurance-to-your-job-is-dumb-and-bad-so-why-are-we-still-doing-it/700734/20 "2014-10-08T18:59:55Z")
> [@Wesley\_Clark](#): > > [Single-Payer National Health Insurance](http://www.pnhp.org/facts/single-payer-resources) > > Medicare for all could save 400 billion a year. In our 2. 8 trillion health system and 17 trillion gdp that is a lot of money, but will only reduce medical costs by 2-3% of gdp. European nations do not all have single payer, but all keep costs to within 8-11% gdp. We would still be far more expensive. That’s wrong – or rather, it’s an incomplete calculation. The $400 billion is only the administrative overhead that would be saved, and it doesn’t take into account the enormous savings from reduced and contained provider costs, due to uniform across-the-board negotiated fee schedules, as well as ancillary costs like ER over-utilization and fee padding to make up for being shafted by non-payments. This is _ **precisely why** _ Europe, and Canada, has costs in that range regardless of the details of the systems they operate, and the US would, too – though it would probably take time. [Next page](https://boards.straightdope.com/t/tying-health-insurance-to-your-job-is-dumb-and-bad-so-why-are-we-still-doing-it/700734.md?page=2)