The Final Word

The Emerging Health Care Debate…This will be my last post on the “Great Risk Shift,” and I want to thank Kevin and all of you for having me.

In a sign, I believe, of a major emerging debate, USA Today and ABC News have teamed up to run an entire week of stories on the problems in American health insurance and how they can be fixed. Over at TPMCafe, I am currently blogging alongside Andy Stern, head of the Service Employees International Union. In recent months, Stern has provocatively talked about these problems, insisting?rightly, in my view?that the employment-based system of health financing is in serious trouble and needs to be rethought.

Some have taken Stern?s comments to mean we should move away from an employer role in health insurance altogether, perhaps instituting some form of individual mandate that would require all workers to get coverage on their own. But that?s not how I interpret Stern?s remarks (no doubt he will correct me if I am wrong).

Instead, I think he?s suggesting that we need to ensure that all workers have insurance, regardless of whether employers offer private protections. That means getting employers out of the game of deciding whether workers get insurance. But it doesn?t necessarily mean that employers shouldn?t or can?t play some sort of administrative and financing role, albeit one much more limited than they play today.

In my proposal for expanded health insurance, for example, employers can continue to provide coverage on their own, but if they don?t, they?re asked to contribute a modest amount toward the cost of a Medicare-like plan. One virtue of this approach is that employers remain a conduit for coverage, so that everyone who works (including the self-employed, who are allowed to buy into the Medicare-like program for a bargain price) is automatically enrolled at their place of employment. Another is that it ensures that employers still play a role in financing, so that all those costs don?t shift onto workers at once. Yet it still saves employers a bundle. (Yes, on the whole and on average, employers finance health benefits by paying workers less in cash wages. But that payment is largely hidden and most workers greatly value employer contributions.) And a third is that it would allow a large public insurance plan and private employment-based plans to operate side-by-side, with each gaining subscribers over time based on how well costs are controlled by each.

That?s a bargain that would give public-private partnerships a good name.

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