What fights over employer-sponsored health insurance are really about

72 percent of respondents who became uninsured when they lost their job-based benefits said they didn’t fill a prescription, skipped a recommended test, treatment, or follow-up, had a medical problem and did not visit a doctor or clinic, or did not get specialist care because of cost.

72 percent of respondents who became uninsured when they lost their job-based benefits reported problems with medical bills, including not being able to pay their bills; paying off medical debt over time; being contacted by a collections agency over unpaid bills; and changing their way of life to pay medical bills.

40 percent of adults who lost their job-based benefits and became uninsured were forced into making difficult financial tradeoffs in the past year because of medical bills: 32 percent had used up all their savings; 27 percent could not pay for basic necessities like food, heat or rent; 14 percent took on credit card debt; and 9 percent took out a home mortgage or loan.

Those are some of the findings of a recent Commonwealth Fund report. In light of these facts, and the other problems caused by America’s reliance on employer-sponsored insurance (ESI), why do we seem so interested in maintaining the system? Sure, it has a few advantages, one being the risk pooling effects of large groups, but it also has so much baggage. Hardly any policy wonk would choose it as the preferred means of offering health insurance.

Yet, with each release of survey results on what proportion of firms will continue offering coverage after 2014, we fight over whether the findings are credible and what they really mean. One side always says that if employers drop coverage that reveals a flaw in the ACA, which, by the way, will provide coverage options for those without affordable employer options. The other side says if not too many employers drop coverage, it reveals a strength of the health reform law.

But why are we even fighting over something hardly anybody likes? We should want to get rid of the employer-based insurance system. In fact, it’s pretty likely we will, not all at once, but gradually over time. If Americans are to remain covered, as employers shed insurance and its cost, someone else must offer it, and someone else must pay for it.

It’s relatively uncontroversial who will offer that insurance: private plans. I say “relatively” because there are those who would rather see the government provide it, at least as an option. Still, realistically, private plans are likely to be involved if not dominant players.

There’s less consensus about who should or will pay for that coverage, individuals or taxpayers through subsidies. Of course individuals and taxpayers are the same people, so this is really a question of redistribution. How much should there be? The right answer to that question is … there is no right answer. (However, there are correct and incorrect arguments on both the “more” and “less” sides.) Current law–the ACA and our tax code–offers one answer. Some like it. Some don’t. Many are mixed.

Already we’ve come quite far from the fight over whether the ESI system should or will be maintained. I’ve argued that the real battle is over income redistribution. That, in fact, is what those at war over ESI are really fighting about since the degree to which workers receive subsidized exchange coverage affects aggregate redistribution. So, why don’t we just discuss that? Why do still have people talking repeal? Repeal and do what? If you look closely, it’s repeal and redistribute income in a different way. Well, why don’t we just work the redistribution question directly, examine the tax code and the ACA subsidies?

In fact, after all the campaign sturm und drang settles, I imagine we’ll do just that. It won’t be in any neat, tidy, civil way. It’ll be in the modern style of political brinkmanship. At the end of the day, though, we’ll probably still have the fundamental structure of the ACA. We’ll likely still have the basic outlines of our current tax system. But a few numbers will shift. A few things will be tweaked. After all the sound and fury, we’ll still redistribute income, just a little differently.

That’s not to say redistributing income differently is not a big deal. It is, both in real terms and symbolically, if not politically. That’s why the fights over the future of ESI are so fierce. People really care about how income is redistributed. If it weren’t for that, I don’t believe people would fight as much over which institutions–employers or exchanges–will provide insurance coverage.

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