Present Health Coverage Breeds Waste

Twila Brase R.N.
President, Citizens' Council on Health Care
Letter to Editor,
St. Paul Pioneer Press, September 2, 2002

Employer-sponsored coverage has institutionalized waste and inefficiency. With employees trapped by Congress in employer health plans, insurers and managed care organizations have been able to extract double digit premium increases each year. Truth be told, individuals would never buy what employers are annually required to purchase to keep their employees happy. But because most employees don't understand they are actually absorbing the cost of these increases, they're not complaining. They should be.

Health benefits are cash wages dedicated to non-cash compensation. As insurers raise the cost of premiums, employers direct more cash into this non-cash compensation. Therefore, funds that could be new jobs or wage increases are siphoned off into expensive health plans that relatively few people use for major expenses. Yet when employees do need care, managed care delay and denial tactics can be used to block access to those dollars. What most employees need to understand is that cash paid for their health insurance is wages they don't receive, for a health plan they can't choose and don't own, and will lose when they leave the company.

When Congress exempted employer benefits from taxation in 1954, they corralled entire populations into employer health plans, allowing insurers to divert wages into premiums. Were individuals given their full wages and full responsibility for purchasing decisions, they would act like real consumers. Individuals would purchase health care services and insurance policies that fit their needs and their idea of a fair price. Almost overnight, insurers would be forced to become consumer-focused, health policies would transition from expensive prepaid health care into inexpensive catastrophic insurance, and many of the uninsured would become insured.

Congress should facilitate this process by granting federal tax deductions for individual purchase of insurance, and by removing prohibitive and burdensome restrictions from individual tax-free Medical Savings Accounts.