Voters have a hard time knowing and understanding the ramifications of the health insurance market and its relation to health care costs. It seems that being allowed to buy insurance across state lines should provide price competition and lower costs. We know that employer benefits can provide cheaper options for people lucky enough to be working for large enough employers, although some benefits are gold standard and a little more costly. And the seemingly free employer-provided health care enables doctors, hospitals, and drug companies to keep prices high and provide services that aren’t even needed in some cases. So some think that allowing small business to group themselves to buy insurance will work. There is talk of sending the problem to the states in the form of Medicaid grants instead of modifying or eliminating the Affordable Care Act.
On July 2, Regina Herzlinger and Joel Klein published an opinion piece in the WSJ proposing that the IRS help solve the problem by giving all workers, not just employers, the right to use pre-tax dollars to purchase health insurance using Health Reimbursement Arrangements. This would enable them to choose from tighter provider networks that can negotiate cheaper prices. They claim Congress doesn’t even have to pass this proposal because the IRS can simply adjust its technical definition of Health Reimbursement Arrangements.
All branches of government have complicated our health insurance and health provider markets for going on 100 years. It didn't start with the ACA. An article last year in the Chicago Tribune tells how extensive employer-provided or group insurance got started: http://www.chicagotribune.com/news/opinion/commentary/ct-obamacare-health-care-employers-20170224-story.html. Basically, wage controls after World War II with a loophole allowing employer-provided benefits jump-started the group insurance concept that was used to compete for workers and it is still with us today.
Today, Congress—or the IRS—will have to sort out all the contortions in the health care market that have been introduced by government over the years in order to move us back towards a free market. And they have to do it without getting themselves voted out of office. We shouldn’t hold our breaths.
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