If you have health insurance through your employer, will that still be the case if John McCain becomes our next president? The effects of McCain’s health care reform plans on employer-sponsored health insurance are uncertain. People on the far left are saying that McCain’s plan would “shred” employer based health insurance. While I’m not a big fan of McCain’s health care reform proposals, I doubt that the employer-based health care system would really disintegrate under his leadership. It’s generally acknowledged that his proposals for increasing tax credits for people who buy their own health insurance would make individual health insurance more attractive to consumers who can qualify for a medically underwritten policy. This would likely lead to at least some attrition from employer group policies, with younger, healthier employees choosing to purchase their own health insurance, for less than the amount of the tax credit ($2500 for individuals, and $5000 for families). That in turn would lead to employer group policies being comprised of an older, sicker population, likely resulting in increased premiums.
But employers use health insurance benefits as a tool to woo and keep good employees. With the baby boomer generation heading into retirement over the next couple decades, American companies will have lots of job spots to fill. It’s likely that they’re going to want to keep as many hiring tools in their arsenal as they can. And change doesn’t come about overnight, especially big change like a massive shift away from employer group health insurance. With gas at $4/gallon, people aren’t driving half as much as they were when gas cost $2/gallon. We’re creatures of habit, and I can’t see employer sponsored health insurance disappearing overnight.
I don’t think that we necessarily need to have health insurance linked to employment, and in many ways I think it’s detrimental. But the main advantage is that it’s guaranteed issue. If McCain’s plan results in any decrease in employer group plans, we’re going to see an increase in the number of people without health insurance, simply because of the underwriting rules that individual health insurance carriers use. This is a double-edged sword, because if we remove the underwriting from individual health insurance plans, the prices would increase dramatically. But for people with serious pre-existing conditions, options for coverage are seriously limited in the current market. In Colorado, we’re lucky to have a guaranteed issue high risk pool health insurance plan, but it’s expensive and has high out-of-pocket costs.
If McCain’s plan is going to provide set tax credits for everyone who purchases their own health insurance, we should at least make age and gender non-issues for individual health insurance premiums. If we average the costs over the entire population and charge everyone the same price, regardless of age or gender, we would come closer to a fair system. I’m still in favor of charging higher premiums for smokers and people who are obese (ie, things that contribute to increased health care expenses and are personal choices), but it doesn’t seem fair that a healthy 20 year old male can pay $1200/year for his health insurance, while a healthy 50 year old female might pay $3000/year – and they both get the same $2500 tax credit under McCain’s plan.
If the country were to shift towards a system based more heavily on individual health insurance, I think that one benefit would be that the individual health insurance industry would be in more of a public spotlight, and might be forced to make some modifications to allow coverage for more people, with more fair pricing.
