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The Middle of the Beginning of the End

James Kwak responds to my earlier post on employer-based insurance and notes that the problem isn't simply that employers are dropping coverage, but that there's every reason to believe that that deterioration will speed up:

Not only is employer-based coverage deteriorating, but the reasons for that deterioration imply that it is likely to only accelerate. As health care costs continue to increase, even if the rate of increase stays the same, the rate of deterioration will increase, because each year health care costs become a larger proportion of total costs and therefore harder to absorb. (Put another way, if health care cost inflation remains around 7% per year, each year it will be 7% of a larger proportion of employers’ costs.) Deterioration will take three forms – some employers will drop health coverage altogether, some will increase the share paid by employees, and some will shift toward less-generous plans.

Klein’s point is that it may be dangerous to premise health care reform on the idea that the employer-based system will remain what it is, because it won’t. My point was that because the employer-based system is slowly dying, people with employer-based coverage should not be thinking, “I don’t need health care reform, I’ve got my employer-based plan;” they should be thinking, “I’m afraid of what will happen when my employer drops its plan, so I need health care reform.” Unfortunately, I think both of us are right.

Me too. The upside is that health-care reform is really just rhetorically based on the idea that the employer-based system can be strengthened. In reality, the health insurance exchanges are an obvious effort to begin to build its successor. But that's why it's so important to get them right.

By Ezra Klein  |  September 11, 2009; 4:45 PM ET
Categories:  Health Coverage  
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In Oregon:

"Health insurance up by double digits in Oregon ... The latest round of skyrocketing health insurance rate increases, from 10 percent to 23 percent, reflect the fundamental reason Congress is embroiled in a turbulent national debate over how to fix the nation's health care system."
(, The Oregonian, 8/29/2009)

Several small business profiled in the article are dropping insurance. Large businesses, with their larger employee pools and better bargaining power, can't be far behind.

Posted by: mmsoar | September 11, 2009 5:57 PM | Report abuse

Whatever it is we're doing now, with the bills being proposed in Congress, it is not reform.

We're adding more people to a bloated and inefficient system.

We're passing more costs on to consumers, at a time when salaries have been stagnant for years.

We're mandating more clients for health insurance companies.

This is not looking like a win for consumers by any stretch of the imagination.

Posted by: anne3 | September 11, 2009 6:45 PM | Report abuse

Employer-based insurance is done. The tax on so-called rich insurance plans, which will start affecting average families before we know it, is the nail in the coffin. The question is what we will do next. Will it be Wyden-Bennett or Ezekiel Emanuels' plan? I hope it's the latter because we need cost control on a national level.

Posted by: bmull | September 11, 2009 9:49 PM | Report abuse

I'm so old, I can remember when the health care reform debate was centered on the proposition that everyone in America liked the coverage they had.

Posted by: serialcatowner | September 12, 2009 2:35 PM | Report abuse

One of they key issues with insurance from a compensation standpoint is that you don't know how much your employers are paying for it. Therefore, a job that looks like it pays more money may be paying for less insurance.

Posted by: staticvars | September 13, 2009 12:09 AM | Report abuse

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