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Sun Mar 18, 2012, 08:35 PM

Chart of the Day: Employer-Based Health Insurance is Going the Way of the Dodo

Paul Krugman

Reed Abelson at Economix points us to a startling study on the effects of the Great Recession on health insurance. You can see similar trends in the Census data, but for whatever reason this survey — carried out by a highly reputable group — is even stronger. Here’s the key picture:

The chart is from the National Institute for Health Care Reform.

What this says is that the system that has provided workable insurance coverage to many (but not enough) Americans is coming apart at the seams. And this in turn means that if health reform goes down, we’re going to be looking at a wave of misery spreading across the land.

Kevin Drum/Mother Jones

Over the past decade, the number of Americans with employer-sponsored health insurance has dropped from about 70% down to nearly 50%. Note that this is for the non-elderly only, so it's not due to the aging of society or the growth of Medicare. This is working-age people only.

Most Americans simply have no clue how bizarre it is that we rely on employers to provide health insurance for most people. We've all grown up in this sytem, so it seems completely normal. But it's not. It happened through a weird combination of historical accidents, and it makes no sense. Why should an airplane manufacturer also be in the healthcare business? Why should you lose your health insurance if you get laid off? Why should your choice of doctor be limited by your employer's choice of insurance carrier? (And why should it change whenever your employer decides to change carriers?) Why should your boss be allowed to dock your paycheck if you don't get the medical "counseling" he deems necessary? (Yes, this is real. And it's rapidly making its way to a corporation near you.)

It. Makes. No. Sense. And dozens of countries around the world have shown that there are better, less expensive, more universal ways of providing medical care. It is truly a mystery that we still put up with the archaic, Rube Goldberg mess that passes for health insurance in this country. If the red trendline I added to the NIHCR chart turns out to be accurate, maybe we won't for too much longer.

(The study -- Great Recession Accelerated Long-Term Decline of Employer Health Coverage -- is in PDF format.)

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Reply Chart of the Day: Employer-Based Health Insurance is Going the Way of the Dodo (Original post)
tpsbmam Mar 2012 OP
alcibiades_mystery Mar 2012 #1
SharonAnn Mar 2012 #2
TheMastersNemesis Mar 2012 #3
undeterred Mar 2012 #4
TheMastersNemesis Mar 2012 #5
Old and In the Way Mar 2012 #6

Response to tpsbmam (Original post)

Sun Mar 18, 2012, 08:52 PM

1. What happened to health insurance in the late 90's/early 00's? Demutualization.


The great unsaid word in the health insurance debates is demutualization. Before the late 90's, virtually all health insurance wsas provided through a mutual insurer: the policy holder was literally an owner of the company, and received "dividends," etc. With demutualization, all these mutual companies were transformed into standard corporations that could issue equity securities. In order to that to happen, they all had to apply to various regulatory bodies and hold public hearings and convert policy-holders into share-holders and receive some majority vote from the policy holders. This was what the big investment banks and corporate law firms were up to in the years running up to 9/11: insurance company demutualization. Needless to say, there was outcry and outrage from the usual consumer advocates on the left, who all predicted catastrophe. Needless to say, they were correct, and largely ignored. Insurance demutualization was a juggernaut sweeping up all the big mutual insurers. One can already see the issue: if you are literally owned by the policy holders, you are beholden to the policy holders. If you are beholden to the shareholders, well profit above all else, and policy holders be damned! Insurance was actually a simple principle, despite its complexity in practice: people pool money and help each other when a member needs help. It's that simple; that's the bedrock principle of an insurance MUTUAL company. That model is said to have "failed." The big insurers claimed to need to raise capital on the equity markets. They begged to privatize. And these charts show us the results. Insurance demutualization is the great Elephant in the room of insurance costs debates. The "market" of the privatized insurance company running on equity securities rather than policy holder premiums is the great policy disaster of the last 15 years, a complete failure of the capital markets to produce reasonably good business models and service. But nobody says anything. It's neoliberalism in smithereens.

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Response to alcibiades_mystery (Reply #1)

Sun Mar 18, 2012, 08:58 PM

2. Same as utility "deregulation" and privatization. More $ for executives.

That's the real reason. Executives couldn't get enormous salaries and bonuses from public utilities or mutual insurance companies.

So, looking out for their financial improvement, they foisted these gems on us.

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Response to tpsbmam (Original post)

Sun Mar 18, 2012, 09:21 PM

3. One Thing To Remember About The GOP PLan

There is one thing to remember about the GOP health plan. It calls for ending employer paid health insurance and replaces that with individually owned health insurance that includes a tax sheltered "health savings account". They also want to scrap the Affordable Health Care act that prevents dropping coverage and denial for pre existing conditions.

Also as part of the ownerships society you will get to buy your own unemployment insurance, disability insurance, workmans' compensation insurance, disability insurance, life insurance, vacation savings account, retirement 401 k, long term and old age health insurance, schooling and training for a life of multiple occupations, etc. And you get to do that while paying to raise a family, pay for your kids education, all related sales taxes, property taxes if you own a home, interest to banks, gas taxes, home insurance, casualty insurance, natural catastrophe insurance, etc.
Add to that there will be no family planning because of mandated full quiver family requirements.

And you have an economy that is market driven where there is no minimum wage, no limited work hours, no overtime pay, no bargaining (only begging), no longevity, no job security, no holidays, no vacation, etc.

Vote Republican for a brave new world of work == er slavery.

Since the government will be nonexistent you as an individual OWN IT ALL in the ownership society.

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Response to tpsbmam (Original post)

Sun Mar 18, 2012, 09:38 PM

4. They want to keep as many people as contractors as possible

and most contractors have no health insurance. I am working in pain, pretending not to be in pain, because I am afraid I would lose the job if they found out I am in pain. But I can't afford to go to the doctor until I get insurance, and I won't get health insurance unless I get hired. I could buy into a cheap plan but I don't know if it will be worth it.

And the Republicans think there is no problem.

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Response to undeterred (Reply #4)

Sun Mar 18, 2012, 09:44 PM

5. Sorry To Hear That

Sorry to hear about your predicament. Sadly when I worked at DOL in the early 1980's I was predicting the outcome we have today with labor. Our labor and employment system has been almost completely sabotaged by the GOP and big business.

Workers must demand a second economic bill of rights like FDR suggested in 1944 and that Teddy Roosevelt first brought up in 1912. It is time to go left and demand rights for all workers.

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Response to tpsbmam (Original post)

Sun Mar 18, 2012, 10:36 PM

6. Everytime I engage with an Obamacare idiot, I ask 2 questions

(1) What kind of coverage do you have?
(2) What do you suggest in place

Typically, the critics have either employee paid insurance...or none at all. I've yet to meet any critics who pays for private healthcare insurance out of their pocket that are happy with their situation.

None, of course, knows what they'd replace Obamacare with. Idiots.

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