Chris Pope writes at E21.com about new options that could transform the existing system that ties most health insurance to employment.
The battle to reform health insurance has largely concentrated on the individual market, in which only 15 million Americans are enrolled. By contrast, 158 million Americans are covered by employer-sponsored plans. The Obama administration did very little to shake up those arrangements—and the same was true of the Trump administration until last month, when it announced a proposed rule that might bring sweeping changes to this bigger market. …
… Cost controls under employer-sponsored insurance tend to be unpopular, as any savings accrue to the firm, while reductions in access to care are borne by staff. Because employers must make the same plans available to all workers, who have a multitude of idiosyncratic needs and preferences, businesses tend to purchase benefit packages and networks that are broader and more expensive than price-sensitive individuals would buy for themselves. …
… A regulation proposed by the Trump administration attempts a more constructive approach. Acting within the existing tax code, it would allow employers to deposit funds in Health Reimbursement Accounts for individuals to purchase their own preferred health insurance coverage. (Previously, HRA funds could only be used to pay out-of-pocket expenses associated with a group plan.)
The regulation imposes several safeguards to prevent employers from using HRAs to skimp on providing adequate coverage to staff with costlier medical needs. Ironically, it does this in part by making use of ACA regulations. …
… The proposed rule offers an opportunity to test the feasibility and advantages of a broader shift away from employer-sponsored insurance. Such a shift is not without risk, and so the administration is right to proceed cautiously. But there may be much to be gained from empowering consumers in the choice of health insurance. Our fear of doing so has needlessly inflated the cost of healthcare for far too long.
