Government and Employer Health Insurance = High Cost

According to an August 2006 report issued by the Census Bureau, nearly 60% of Americans have employer-provided health insurance. Employer-provided health insurance took off during the wage freezes imposed in during WWII. To attract and keep employees, the government permitted employers to offer health coverage to workers as benefits, in lieu of salary increases. After the war ended, the job-provided healthcare continued because workers liked it.

Has employer-provided health insurance outlived its usefulness? Perhaps it is time that employers discontinue the practice, and instead, increase salaries, so that employees can directly pay for medical service. The time might soon come when employers get out of the healthcare business, but not for the reasons one might expect. What could emerge is government-provided health insurance for all. This would be far worse than what it replaced.

The cost of healthcare is rising, and one reason may be because doctors and hospitals do not bill people, but bill impersonal health insurance companies, which are seen as the repositories of infinite amount of money. Missing is the moral restraint that would naturally arise in most people, if they were asking living, breathing humans to pay. Add to the lack of moral restraint, the basic economic principle: if the cost of a good is perceived as being low, we consume more of it. The result is that Americans who have health insurance would go to the doctor for a scratched fingernail, because doing so imposes almost no direct cost.

People like health insurance because they believe they would be unable to afford healthcare without insurance, but it is the insurance itself that might be making the healthcare seem out of reach.

Replacing the employer-provided insurance with one provided by the government would likely increase the cost of healthcare. If you think hospitals and doctors find it easy to bill businesses, wait until they are given the opportunity to bill the government. For evidence, we need only look to the high cost of administering Medicaid and Medicare.