Friday, August 18, 2017

Employer sponsored Health Insurance

This is Joseph

Via Mike the Mad Biologist was this gem:
Even people who do not switch jobs are vulnerable to losing their health insurance under the employer-sponsored system. For the health insurance market to actually work like a market, participants need to be prepared to change their insurer every single year. Employers need to constantly rethink what insurers they should contract with to provide benefits. And when open enrollment comes around, employees and those on the Obamacare exchanges are supposed to reassess their options and switch to the best insurer on offer. Put simply: a well-functioning private health insurance system requires people to frequently change their insurance situation, which is precisely the evil that Krugman says we need to avoid.
I think that this is an under-appreciated point.  Insofar as "continuity of care" is an important part of medical care, shopping around is discouraged.  Just think of how long intake medical appointments take, and thus impose a cost on patients switching providers.  Some degree of switching of providers is inevitable in any health care system (people move or retire).   But this stickiness undermines one of the major assumptions behind how markets are supposed to work.

Now this doesn't necessarily limit the options all that greatly, but it is a good reason to be cautious about too strong of a status quo bias when considering the current health care system.  There are some great aspects to the current system but also some real costs that need to be considered as part of any policy-reform.

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