The price of American healthcare continues to surge, including for those who get their insurance via their employers.
The main elements are a “system” whose politically powerful constituencies benefit from economic incentives to maximize the number of procedures; for-profit insurers seeking to maximize profit and senior executives’ salaries; by far the world’s highest paid physicians, and hospital executives and astronomical drug prices
Thus healthcare premiums for employer-sponsored coverage have risen three times faster than wages even as deductibles and co-payments have soared.
These costs have wiped out most of the (small) wage gains that American workers have gotten since the turn of the last century.
Regina E. Herzlinger, a professor of business administration at Harvard University; Barak D. Richman, a professor of law and business administration at Duke University, and Richard J. Boxer, M.D., a professor at the David Geffen School of Medicine at UCLA, have proposed in The New York Times a way to address this and in so doing give American workers real raises.
“What if employers transferred to their employees the amount they now spend on coverage and the law allowed employees to deduct that spending from their taxes?
“And what if those laws allowed employees to opt not to spend that entire sum on health insurance, but instead take some home as wages? If an employee in a marginal tax bracket of 25 percent were given an $18,000 budget to purchase insurance, but opted for a plan that costs only $14,000, she could take an additional $3,000, post-tax, home to her family….
“Abundant research has shown that low- and middle-income workers have a strong preference for low-cost plans, much more than what their employers currently offer. If workers know they can increase take-home wages by purchasing less expensive insurance, they will demand more insurance options, and insurers are likely to respond. To avoid the chance that cash-strapped families purchase inadequate plans, insurance plans would have to meet the Affordable Care Act’s minimum standards. The law’s requirement to purchase insurance, with penalties for non-purchase, would lessen the possibility that workers would keep all the money rather than buy insurance.
“Freeing workers’ choices for insurance would also bring pressures on insurers to create new products that control costs, such as bundling of homeowners, auto and health insurances, or enabling people between 55 and 64 years old to access Medicare. State legislatures would feel similar pressures to adjust regulations to support competitive insurance marketplaces.”
“Stiffer competition and cost pressures on insurers, in turn, would force providers to offer more efficient care, such as by replacing outpatient and emergency room visits with telemedicine technology.”
To read all of this prescriptive piece, please hit this link.