How did the current healthcare system in America come to be?
The current employer-based healthcare system was developed in 1940s. Employers were barred from offering higher salaries to attract workers, so instead employers offered health insurance.
The IRS created a rule that said workers who received health insurance did not have to pay income taxes on them, and employers could write off the cost of medical insurance as a business related expense.
A just like that the main way most Americans access health care came from their employers.
But things have changed since the ’40s. Back then people would take a job for a local company and stay there until retirement. Now days the average American will have changed jobs 11 times by age 42.
In the ’40s American companies competed against other American companies. But the global economy now has American companies competing against foreign companies that don’t pay for their employees’ health-care costs.
Now days, health-care costs are rapidly increasing at twice the rate of inflation. Companies are being forced to make big changes to their health care plans. Some are raising employees’ medical insurance premiums and deductibles, others going with cheaper health insurance plans, and some are dropping all medical benefits.
More than 50 percent of American companies who offer medical insurance don’t offer their employees a choice on plans. So most Americans no longer have the option of giving their health insurance business to insurance companies that treat them well and cover their needs. This is thwarting market forces that hold down costs.
The money that is spent on employer based health insurance could be going to higher wages, letting individuals make their own medical insurance choice.
But buying health insurance on your own, through a tradition health insurance company, ends up costing you more. Large businesses have purchasing power to drive down costs. Individuals don’t. Also, individuals don’t get tax breaks that employers get for buying health insurance. And in most states, medical insurance companies can discriminate against individuals and deny coverage or charge large fees to people with pre-existing conditions.
So it’s no surprise that only 17 percent of American’s buy health insurance on their own. But it assumes that the current health care system is the only choice American’s have.
American’s need the security of being part of a large organization and not being denied coverage. They also need portable medical insurance that goes with them to whatever job. Americans need the market power to buy medical insurance coverage that works best for them. They need health insurance businesses competing for your business.
