schmidlap
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- Oct 30, 2020
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Thus, the most expensive healthcare cost, by far, exceeding that of all advanced democratic nations that, unlike the U.S., cover virtually every citizen.There is no special relationship between and the potential need for employee retirement plans, life insurance, dental insurance, disability insurance or heath insurance other than to help companies compete for the best employees and keeping them.There is no special relationship between employment and the potential need for healthcare, nor any need for each employer who provides group health insurance to duplicate the administrative functions of all others. Such a senseless, inefficiant association contributes to the cost for healthcare in the U.S. being nearly twice that of all advanced democratic nations. Free private enterprise from bearing the onus, and eliminate that unnecessary administrative expense.Health insurance paid by the employer is just one of many employee benefits that are either only partially taxed or not taxed at all. Most of these benefits came about at different times for different reasons. Often the reason for exempting the benefit from taxes has disappeared but the tax policy remains the same. Today, tax breaks for employees with employee health insurance helps reduce the number of uninsured, which is heavily supported by democrats and begrudgingly support by republicans. Thus it's not likely to change.Had it not begun as a perquisite to encourage employees to remain in their jobs during wartime, an incidental incentive from which it metastasized, no one designing the nation's ideal healthcare system would have conflated coverage with employment. Employment is irrelevant to every American's risk of incurring significant medical expenses.During and before WWII, health insurance was essentially hospitalization and in many cases only paying for the most costly procedures. Everything else was the subscribers responsibility.During the war [WWII], wages were capped by the federal government, so employers needed another means to entice and keep employees. The incentive they decided on were benefits like health insurance. These health benefits packages were not considered a part of employees’ wages and the employers could deduct what they spent on these benefits packages from their corporate taxes. A win-win situation!
There are reasons that what had begun as an employment perquisite of little value - an employer picking up the then negligible tab for an employee's medical insurance - has grown to become a monumentally expensive and inefficient method of covering Americans.
There is nothing unique about Americans employed by businesses administering health insurance plans needing health insurance. All Americans are subject to the risk of incurring medical expenses, sometimes ruinously high. There is no rationale for subjecting Americans who are between jobs, for whatever reason, to the potential of devastating loss if a family member should incur substantial medical expenses during such an hiatus.
The need for businesses to divert a portion of their operations to administer such plans is only one unnecessary imposition. The expectancy of an American to have his health insurance provided by an employer is a barrier to enterprise, one more impediment to potential start-ups, and an incentive to remain with a company out of fear of losing coverage rather than progressing in one's career. It was a coercive measure calculated to keep employees in their place during wartime.
Differentiating Americans working for companies who administer healthcare plans from other Americans is counter to the economic advantage of economy of scale, administrative functions assumed by the employer being repeatedly duplicated by every employer rather than all Americans, employed or otherwise, being under a single plan that minimizes the bureaucratic requirements and most efficiently distributes risk as it creates the largest risk pool, an actuarial reality.
The federal and state tax systems provide significant financial benefits for people with private health insurance. The largest group of beneficiaries is people who enroll in coverage through their jobs. There also are tax benefits for people who are self-employed and for people with high medical costs...
The largest tax subsidy for private health insurance — the exclusion from income and payroll taxes of employer and employee contributions for employer-sponsored insurance (ESI) – was estimated to cost approximately $250 billion in lost federal tax revenue in 2013... the largest tax incentive for private insurance — the exclusion of the cost of ESI — is an indirect subsidy that is never actually reported to the individuals and families who benefit from it. Many people with employer coverage are probably not aware that the federal and state tax exclusions for private health insurance provides them with a subsidy worth several thousands of dollars a year.
Tax Subsidies for Private Health Insurance
This brief describes the different forms of tax assistance for private health insurance, including subsidies offered through the Affordable Care Act’s marketplaces and benefits for people who…www.kff.org
No competent individuals designing a nation's healthcare system would have ever attached coverage to the plethora of private employers. It was an unforeseeable, insidious development.
The cost of healthcare over the last 75 years has increased as much as 40 times; that is, a $100 procedure then would cost about $4,000 today. When people see figures like this, the usual first question is what is the cause. We have heard the answers many times, goverment, greedy insurance companies, Obamacare, overpaid healthcare workers, big government, drug companies, etc. What you don't hear is people are utilizing healthcare 5 times as much as they did in1950. The number of medical treatments have tripled since 1960. You might like paying $5 to go to the doctor 75 years ago, but you wouldn't like hearing him tell you that there was no cure for your lung cancer or your heart disease, or your son has polio and he will probably spend the rest of his life in an iron lung, etc. etc.
In large part due to better healthcare, life expectancy has increased from 65 in 1950 to 79 in 2020 and is expected to increase to 89 by 2070. Today 11 times as many people are living to 100 compared to 1950. When looking at the increase in healthcare cost we need to ask our selves how important is living a longer and healthier life.
With or without tax breaks, employees would still take advantage of these benefits because the purchasing power and negotiating power of businesses is almost always better than the individual. Eliminating employee tax advantaged benefits would impact the highest paid employees far more than the majority of employees whose tax rates are much lower and their need is generally higher.
The inefficiency of requiring every one of the millions of private sector employers to assign resources to administer every group plan, and duplicate the operations of every other one, adds enormous cost to the nation's healthcare that leaves millions uninsured whose unpaid medical costs are still assigned to the taxpayer.
How many of those advanced democracies are clamoring for a U.S.-type system where a citizen's coverage is so much the business of each and every employer?
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