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Jack Strayer: Thinking about the high costs and toll of employer-provided health insurance

Published 8:56pm Wednesday, December 21, 2011

In 1992, I began a new career in Washington D.C. as the director of federal affairs for the Council for Affordable Health Insurance (CAHI).

My primary job was to promote Health Savings Accounts (HSAs) to members of Congress and the health care industry. In 2003, HSAs were fully enacted allowing individuals and employers to create tax-advantaged savings accounts designed to cover health insurance deductibles. More than 20 million people now have HSAs and they are giving people more control and more choices in their health care coverage.

One of the things I learned at CAHI was that lots of young and healthy people dropped employer-provided health insurance, leaving only older and relatively sicker people in the employer-provided health insurance market. This practice leads to a phenomenon called “the death spiral” as more and more people drop out of the employer-provided health insurance market resulting in dramatic and devastating increases in health insurance premiums.

During the past several weeks, American workers with health insurance provided by their employer are receiving notice of the increase in their out-of-pocket share of the premium. Many are paying more than half the cost of their health insurance, while deductibles are rising and the coverage is shrinking.

HSAs can help absorb some of the deductible increases, but workers are now completely aware of the true cost of their coverage. And many are choosing to drop out of the market and risk going without health insurance because they simply cannot afford to pay their share of their employer’s premium.

During the past five years, as our nation’s economy entered the Great Recession, we all learned several lessons, including the impact the global economy can have on our personal bank balances. Since the United States now — and forever more — will be competing with other nations’ economies to stay solvent and viable, we need to take an internal look at our personal perceptions of the world and our role in it.

The United States is the only country in the western world with employer-provided health insurance. We are also one of the few countries without some sort of universal health coverage.

Employer-provided health insurance has placed the United States in a less-than-ideal position competition-wise. As employer’s health costs rise, they react in several ways. They require employees to pay a greater share of the cost; companies increase the costs of the goods and services they provide;  employers lay off workers, and corporations move jobs overseas to stay competitive in expanding global markets.

If we are going to compete in a global economy, we need to look at a more practical way to insure ourselves and that would include a close look at a mandatory individual health care system without any employer-provided health insurance.

As a charter member of the Consensus Group on Health, I had a front-row seat in the design of a market-driven, individual and universal health care system. The members of the Consensus Group on Health were health policy experts from the left, the right and the political center of policy making in Washington.

We agreed that we needed a flexible, assignable health care tax credit, or voucher,  that individuals would receive from the government that would pay for individual and family policies of their own choosing.

The cost of such a program is the easy part. The federal government already subsidizes employer-provided U.S. health care to the tune of more than $300 billion. That money could be used to begin financing the individual health insurance system.

The hard part is convincing workers and employers that the current employer-provided health insurance program we use needs to be abandoned and  replaced with a mandatory individual health insurance system. Government workers at the local, county, state and federal levels, organized labor, corporate executives and the human resource people in Big Business will argue that an individual system is unfair and unworkable.

Politicians are loathe to even consider the possibility, making my argument moot. But its time we begin to at least think about it and imagine a nation where employment has absolutely nothing to do with health insurance coverage. Ideally, wages would go up, prices would go down and health care costs would stabilize. New jobs could be created and the costs of U.S. exports would become more competitive, and everyone would have affordable health insurance.

Imagine that!

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