Why did we need Obamacare?

[metoc15411]

Beginning in the 1940s, the government began subsidizing employer-provided health insurance. This was the beginning of the employer-provided health insurance norm. Today, more than 90% of people with health insurance get it through their employer.

The problem of linking employment and insurance consists of three parts.

1. It increases health care costs

The linkage of employment and insurance has encouraged insurance companies to become cost pools instead of real health insurance companies.

Insurance is when a group of people pay a small amount of money today so they can take the money out later if they face a catastrophic, unexpected expense. Cost pooling is when a large group of people subsidizes the expenses of a smaller group of people.

"Life is risky," writes San Jose State University economics professor vk database Warren K. Gibson. "When we pool our risks with others through insurance policies, we reduce the financial impact of unexpected accidents, illnesses, or premature death in exchange for a premium we are willing to pay. I don't regret the money I spent on auto insurance during my first 55 years of driving, although I have yet to file a claim.

Do you know how much it costs to change the oil in your car? I know that car maintenance costs money. When I had a car, I would put aside money that I knew I would need to spend on belt replacements and repairs. I didn't know exactly how much it would be or when I would need it. But overall, I knew that car maintenance costs money, and I was hooked.

Do you know how much an annual physical costs? I know that maintaining your body costs money. But I don’t save up for it. When I had a persistent nosebleed earlier this year, my doctor recommended cauterizing it. I said yes without asking about the cost because I knew my insurance would cover it. Turns out it didn’t work. In fact, cauterization often doesn’t work.

Here's what happens when you pay for something with someone else's money. "What currently passes for health insurance in America is really just prepaid health care — a kind of all-you-can-eat buffet," Gibson wrote. "There is no price transparency. As a result, overconsumption drives premiums skyrocketing, and health care resources are misallocated relative to genuine wants and needs."

Insurance is a good deal for everyone involved only when it actually works as insurance. Using insurance to pay for routine care and predictable medical needs makes it less of an insurance and more of a cost-pooling proposition.

Insurance works. Cost pooling doesn't. Cost pooling doesn't work because it creates perverse incentives. Since you're spending other people's money, you have every incentive to spend as much as possible and no incentive to be wise or frugal.

2) He leaves millions behind

If most people get health insurance through their employer, people who don't are at a distinct disadvantage. People who don't qualify for Medicare or Medicaid often find that they can't buy insurance on the individual market because they have a condition that means insurance companies either won't cover them at all or will cover them at exorbitant prices.

3.This creates a blockage in the work

Tying employment to insurance creates " job lock ." People stay in jobs they'd rather not because they're afraid of the individual health insurance market. That means less happy, less productive workers and fewer businesses starting.