Monday, August 13, 2007

Healthcare for the Self-Employed

Daniel Gross has a great article in Slate, I Can Get It for You Retail, on the ridiculous nature of the reforms to health care (particularly for the self-employed) proposed by President Bush and Rudy Giuliani. Here's my favorite part of Gross' article, "The time has long passed to be shocked by the ignorance that the press, many professional economists, and politicians show about the market for health insurance. After all, virtually all of them have their insurance paid for by a university, the government, or a Fortune 500 company."

Indeed. They have no clue how much health insurance really costs. Gross found that health care premiums for a family in 2006 ran $11,600/year. Just about $1000/month. I can certainly vouch for that figure. That's for decent insurance. You can get high deductible insurance for less.

But what is Bush's proposed "tax break" for the self-employed? $4500. And that's $4500 that we wouldn't be taxed on. This is not a tax break. It excludes from taxation less than half of the actual cost of decent insurance. Giuliani's plan is equally stupid (or perhaps I really mean "pro-health insurance companies.")

Gross makes the excellent point that the reason companies can negotiate better premiums is that they buy in bulk. You know, like Wal-Mart. And companies are treated far better by insurance companies than individuals (even when individuals buy insurance through a professional organization). Companies get insurance that covers more, they pay less, and they aren't dropped if they have any sign of illness in their ranks.

Gross points out the complete lack of rights when you try to buy health insurance on your own:

What's the customer's recourse? Fights between insurance companies and individuals are never fair. The overwhelming majority of individuals lack the resources, time, and fortitude to confront well-funded, profit-obsessed bureaucracies. Nor do they have human resource staffs or outside consultants that can act as advocates. Michael Moore can only make so many phone calls. Ah, but what about the vaunted power of the consumer to "negotiate" by taking his or her business elsewhere? Here, again, the individual can often be at the mercy of a brutal market. If you have a pre-existing condition or an adverse history, it's not that easy to switch.

It is a terrible system compared to the alternatives and buying retail is just another way of getting screwed.