The insanity of employer-based health care

Today's New York Times featured a chilling anecdote about the consequences of linking health insurance to employment:

ASHLAND, Ohio — As jobless numbers reach levels not seen in 25 years, another crisis is unfolding for millions of people who lost their health insurance along with their jobs, joining the ranks of the uninsured.

The crisis is on display here. Starla D. Darling, 27, was pregnant when she learned that her insurance coverage was about to end. She rushed to the hospital, took a medication to induce labor and then had an emergency Caesarean section, in the hope that her Blue Cross and Blue Shield plan would pay for the delivery.

Comments

[Rob]

You're right, it's inane that the predominant way of providing health insurance these days is through employers. We don't expect our employers to provide auto insurance or homeowner's insurance. Nor, to the extent that health insurance is considered one of life's necessities, do we expect employers to provide shelter or food. (We also don't expect Government to provide those necessities of life, except for those who are impecunious; that explains Government programs like food stamps and Medicaid and the absence of programs like middle-class food subsidies and health insurance.)

The interesting footnote is that employer-provided health insurance is an historical oddity that arose during the Second World War as a way of evading Government wage controls. Health insurance was a new benefit for workers, but it didn't count against the wage caps. Thus their effective compensation rose in a way that was considered legal.

Will we ever learn about the unintended consequences of well-intentioned Government regulations?

[Noumenon]

That sucks that COBRA doesn't cover you if your company shuts down. Major loophole.

[David]

In addition to the point made by Rob, company-paid health insurance is now a tax advantage. The business deducts their cost for the insurance from their income tax, but the employee doesn't report her/his employer-paid health insurance as income.