Monday, July 20, 2009

Benefits of Employer Based Coverage

James Klein and John Sweeney op-ed in the Washington Post about the dangers of limiting the employer-provided insurance subsidy for health insurance.

And a couple of my students have emailed and said something like 'but Professor Taylor, in class you described some benefits of employer-provided insurance.' Two things. First, apparently they do something besides look at facebook during class, which is gratifying. Second, here is a quick list of things that employer provided insurance has done well over the past half century:

*increased the use of health care services, especially during an era of innovation in treating heart disease risk factors and with revascularization. Heart disease mortality has dropped substantially over this time (Medicare has also covered such). The point is that some of the increased spending has been worth it due to increased benefits.

*spread risk across groups of people. An employer insuring 300 workers can get a better deal than could each of the 300 attempting to purchase insurance on their own. The reason is that you spread the risk of a high cost event across more people...this is generally what I meant here by healthy subsidize the sick.

*Helped people uninsurable in a private market get coverage. In an employer plan like Duke, there is no underwriting on anything (not health, not age, nothing) there is one premium for all employees within a given family situation (employee only coverage, family, employee plus spouse,etc.). So, someone who is HIV positive, or who has a history of breast cancer, or who has high blood pressure, etc. etc. can get coverage through an employer who would likely be uninsurable via a private insurance market.

The down sides have been enumerated including that if you lose your job you lose your insurance, some employers not providing coverage, the moral hazard associated with insurance paid for largely by someone else shielding people from the cost of their care, companies sometimes providing limited options, the costs/headaches to employers of being involved, etc. But, there are some benefits.

On balance, I don't think the current system is sustainable and warrants a big change. Employment as the way that the non-elderly get health insurance increasingly has more downsides that upsides in my judgment.

No comments:

Post a Comment