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.
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