Making the case for an individual-based health insurance system

“Today’s health care plans primarily compete on price. In large part, that’s because many employers seek to offer the lowest-cost health plans to their employees, which forces the health plans to offer the lowest possible rates. Many physicians and hospitals, in turn, accept reduced fees and payments in order to be the preferred providers of those health insurance plans.

On the other hand, there is relatively little competition among health plans based on quality of care. There are two main reasons for this. The first has to do with adverse risk selection; that is, if a particular health plan were known for its high-quality care, it would likely attract the sickest – and most costly – patients.

The second reason has to do with the economics of our employer-based health insurance system. Employer-paid health insurance has remained popular among workers because it is not taxed as income. If it were, employer-paid health insurance would begin to be less common. In its place, an individual-based health insurance system – in which individuals choose their health insurer in the same manner as they choose an automobile insurer – would begin to grow.”


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  • Curious JD

    This post should be the one that has more comments than any other. It’s the one with the most info lately regarding physicians’ compensation.

  • Anonymous

    This seems like it would work for everyone….since we are all patients.

    The physicians would be compensated adequately and could focus on medicine.

    The attorneys would still be needed to assist those harmed perhaps using a fair “no fault” system.

    More people would be insured.

    The quality of care would rise which should be the primary goal.

  • Anonymous

    Abolishing group health insurance would be a disaster for many employed people in their 40s, 50s, and 60s who have already developed some sort of health condition. My understanding is that such people are uninsurable in the current market (except in certain guaranteed issue states where insurance companies are legally required to take anyone who walks in the door). If their group coverage is taken away, they would have to rely on high risk pools in those states where they exist or change jobs to a self-insuring employer, if they can find any. Having no insurance is financial Russian roulette because providers charge the most outrageous prices to the uninsured, three and five or more times what insured persons or Medicare recipients pay.

    I do note that the author of the article wants stronger protections for applicants, perhaps amounting to guaranteed issue. In Europe where systems of this sort exist there is guaranteed issue, the premium is generally a capped percentage of salary (~ 13% in Germany, whose health care prices are far lower than America’s), and yet the insurance is expensive enough that people are legally required to buy into it — otherwise lots of people would be tempted not to.

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