Of Sickness and Work

I've been thinking a bit about health care of late. It seemed only appropriate since our president is apparently of the opinion that the near collapse of the economy is a problem secondary to our health care system's many flaws and failings. So I'm going to be putting together some posts outlining my few thoughts on the health care system's present state, the problems, the potential, the potential problems...

At any rate, here's the first one.



Thought 1: The fact that health insurance is almost entirely tied to employment in this country is beyond stupid.

Interestingly, this bizarre state of affairs is actually a result (as most bizarre states of affairs are...) of prior government intrusion in the economy. You see (he says, settling into his easy chair and grabbing his pipe...) back, oh, 60 or 70 years ago, there was no such thing as health insurance. If you were sick or otherwise needed a doctor you sought one out, got treated and paid him. All on your own.

Now, keep in mind that this is so long ago that medical science was pretty rudimentary compared with what we have today. Oh sure, they had the germ theory of disease and a few highly efficacious drugs (aspirin, penicillin) but not many. The nearly miraculous and extremely costly treatments that we take for granted today simply didn't exist. For lots of conditions the best the doctor could do was make you comfortable and hope you either got better fast or died quickly. This was not as effective, for the most part, as modern medical science but it was relatively cheap.

So. No health insurance. Then, low about 1941 or so, we got into a bit of trouble with Germans and Japanese and decided to dedicate pretty much our entire economy to destroying their war-making powers. You may have heard the period referred to as WWII. It was an interesting time not just for foreign relations, but economically as well in that the government exerted unprecedented control over the economy, as it might be expected to given that it was purchasing the majority of the output.

Among the controls put in place were wage controls.(fn1) Now, people being bright and enterprising, they wanted some way around the wage controls. They wanted to be able to compete on price for labor, that is to offer higher payments for better workers, just as they always do. But they were explicitly not allowed to offer higher wages. So what happened? That's right! The first large-scale creation of "benefits". You see, rather than paying more you could pay the government mandated wage but add in a benefit like, for example, having your medical expenses paid for by the company.

Bully. And, of course, once created the benefit became a standard expectation and never died even though it is beyond ridiculous to have health insurance tied to employment in the way we do.

And that, dear reader, is the story of why health insurance is tied to employment in the United States: it was an unintended side effect of the well-meaning effort to curb wage inflation during the tight labor markets of the war years.

So, I think we can all agree that having health insurance tied to employment is beyond stupid. But it's interesting to note that this stupid state of affairs is the result of government involvement in the economy; it makes one wonder whether further government involvement in the economy is really the solution...

One of the best ways to wean us all off of employer provided health care would be to stop giving the tax breaks for health insurance only to employers. This gives them the incentive to offer gold-plated health-insurance as a benefit as it's a tax-free way to increase compensation. But why should health insurance be tax-free if your employer picks your choices but after-tax if you buy it on your own?

I thought McCain's proposal on this was great and I was disappointed to see Obama demagogue the point throughout the campaign. Relatedly, I was somewhat heartened to see that Obama has recently changed his mind and floated the idea of removing the tax benefit of employer-provided health care. Sadly, he has missed the point of McCain's plan, which was to move the benefit from the employer to the employee (or, actually, everyone, since you would no longer have to have employer-provided health care to benefit from the tax-savings) and is simply using it as a revenue generating measure to pay for his attempt to nationalize health care.

Alas.




At any rate. Things to look forward to in future health care musings:

- Health care in the US is more expensive than in many countries with socialized systems yet has no better (and, in some measures, slightly worse) mass health outcomes. This is not suggestive of what you think it is.

- Enabling greater access to and utilization of preventative care may be a laudable goal but -- contrary to what many pro-government health care advocates say -- it is in no way a cost saving measure for the health care system as whole.

- And other wackily sensible thoughts on health care economics that I haven't even thought up yet!! What fun.


fn1: Which are always stupid in exactly the same way as price controls are because they are simply price controls on the price of labor. Anyhoo.