GOP healthcare alternative? It’s pretty flawed, too

July 24, 2009

Ugh. So House GOPers have put out their alternative to ObamaCare. It’s really more of a statement of principles with a few numbers. Yes, it is  a good idea to level the playing field between those who get their insurance through their employers and those who buy it on their own. But this is the part that put me back on me heels:

Strengthens employer-provided health coverage by helping the 10 million uninsured Americans who are eligible, but not enrolled in, an employer-sponsored plan get health care coverage. The plan does this by encouraging employers to move to opt-out, rather than opt-in rules.

Employer-based covering should be scrapped, not strenghthened. (In fact, doing so really is key to reform.)  The great Arnold Kling gives five good reasons why:

  • The cost of health insurance is disguised from consumers, because firms do not report what they pay in premiums. Workers are under the illusion that their health coverage is inexpensive, and if they subsequently find themselves having to obtain their own health insurance, they are offended by the cost and instead choose to go uninsured.
  • Workers who are concerned about the availability of health insurance may suffer from “job lock.” They might wish to leave their job for self-employment, pursuit of formal education, an opportunity with a smaller firm, or early retirement, but the potential loss of health insurance is a deterrent.
  • Workers may not enjoy the range of insurance choices that they would have if health insurance were not negotiated for them by employers. For example, if they could choose their own insurance, some workers might elect coverage with higher co-pays and deductibles but lower premiums, in order to have more cash income.
  • Because employer-provided health insurance is subsidized through the tax system, the benefits accrue relatively more to high-income workers.
  • Workers who are fired or laid off can find themselves without health insurance at a point where they can least afford to be uninsured.
  • One comment

    We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/

    A tax incentive to have some sort of medicial saving plan
    could make the diffrence…Save more early for old age. 401k for medicial? I see it as a way to phase out social security and reduce our dependance on goverment and vica versa. Insurance could come down like car insurance. Parents would cover their kids at birth so no prexisting conditions, even better before conception. Still didn’t see anything about tort reform..NO plan can work without that!

    Posted by Tom | Report as abusive