Employer-Provided Health Insurance
By Arnold Kling
We should aim to phase out employer-provided health insurance. However, instead of trying to create a household insurance market that reconstitutes the unsustainable features of employer-provided health insurance, we need to allow for radical innovation in the very concept of health insurance.
On health care, we live in an Orwellian world. What is called “reform” is really an attempt to entrench the existing, unsustainable system of third-party fee-for-service reimbursement for service providers. This third-party reimbursement in turn is know as “insurance,” even though it does not serve that function.
The Obama Administration supports employer-provided health insurance. They probably would support legislation that mandates more employers to provide coverage. On the other hand, the issue of taxing employer-provided health benefits is getting attention. The economic arguments tend to favor taxing benefits. The political arguments tend to go the other way. My guess is that the initial version of the health care bill will include taxation of health care benefits, but if the bill gets into trouble then the tax provision will be dropped in order to gain passage.
UPDATE: See also John Goodman.