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I think he makes some very good points.

However I will point out perhaps a few problems, not insurmountable problems perhaps, but ones that will require workers and individuals to shift their ideas about and their understanding, their many misconceptions, including the author’s of how insurance really works.

For one thing, the reason that employer provided health insurance is typically more affordable for most workers and their employers is that the risk and claim history is pooled. The larger the employer and the more people participating in the plan, the more the risk, based on things like average age and claims history, the more the risk is spread out over the entire group, something that keeps premiums lower overall. Of course if you work for a rather small employer and the majority of the employees are older and or, in the previous year there were a even a few large $ claims, for say for instance, even one employee who was treated for cancer or one employee whose wife gave birth to multiples or had a baby born prematurely who needed NICU and specialized care, the employer’s premium and ergo, everyone’s premium goes up the following year but not as much as it would if you alone were assessed on your individual risk. And I’ve seen this happen. The plus side is by pooling the risk, the costs are spread out somewhat. Now some might not think that is “fair”, at least until you have private health insurance and one year you actually need to use it, and need to use it lot. Perhaps other groups other than employers could join groups and be in a pool for health insurance.

And think of this way; in terms of home owners and car insurance. If you live in an area that is prone to floods or hurricanes, brush fires, landslides or live in an area where car thefts or accident rates are high you are, even if you’ve never made any previous claims, are going to pay more because you are in a higher risk pool than those who are not.

But nothing that your insurance covers for free is actually “free”. Sure you might get a yearly check up, a mammogram, well child care visits and vaccinations with no out of pocket costs or office visits and prescriptions with a small co-pay, but you are paying for it somewhere else.

However, if you are buying health insurance in the individual market, just as it with home owners and car insurance, it is your perceived risk and your own, age, health and or prior claims history (and that of any of your covered family member’s pre-existing conditions) alone, that factors into the premium you pay. That might be great if you are young and healthy and unmarried but will really suck if you are married, with a lot of young children or are older, have pre-x conditions like diabetes or HBP or have a family history of heart disease or stroke or cancer even if you yourself are healthy. But then again, perhaps you should, just as with your car and property insurance, have to pay more and not be forced to pay for coverage you don't want or will ever need. But how many of us would scream to high heaven about having to pay more…?

In 1953, the IRS compounded the problem by holding that employer-provided health insurance was not part of wage compensation for tax purposes. This means that if a worker is paid $40,000 and their employer also provides an insurance policy worth $16,000, the worker pays taxes on just the $40,000 in wages. If, however, instead of providing insurance, the employer gave the worker a $16,000 raise — allowing the worker to purchase his or her own insurance — the worker would have to pay taxes on $66,000 in income, a tax hike of as much as $2,400. This puts workers who buy their own insurance at a significant disadvantage compared to those who receive insurance through work.

That is true; however this could, this might be offset by making the cost of private health insurance premiums fully tax deductible to the individual. However that requires one to spend their after tax dollars on the purchase of health insurance and then wait for a tax refund from the government, after the fact. And FWIW, I am all for not “feeding the beast” in the first place by taking advantage of “pre-tax” payroll deductions for my health insurance and also for my 401k and FSA and HSA deductions, not paying those taxes up front and then waiting for (and hoping for) a refund.

But then again how much of the premium should be “deductible” from taxes for my private health insurance. If I’m 100 pounds overweight, I have HBP and diabetes, I am a smoker, I have a family history of early death from stroke or breast cancer, lung or prostate cancer, etc. and my private health insurance premiums are through the roof based on the actuarial risks, should I get the very same tax deduction for 100% of my private insurance premiums as someone who does not have the same risks and is much healthier and pays a much lower premium?

He is also ignoring the fact that employers under the current tax system can deduct from their business tax returns, the cost of not only providing health benefits and other benefits like basic life insurance and STD and LTD coverage but also the cost of paying most salaries as a cost of doing business against their bottom line and their net taxable business profits.

So in his scenario, while the business could no longer have to offer any company provided pre-tax health insurance and in theory, just pay their employees a higher salary, at the end of the day the employer’s net taxable income will remain unchanged, however the employee’s taxable income will increase at least until they file their tax return and wait for a refund of “overpaid taxes”. I would also add that those theoretically higher wages paid in lieu of providing health care coverage are going to be subject to payroll taxes.

Basing insurance on employment also means that if you lose your job, you are likely to end up uninsured. And once you’ve lost insurance, it can be hard to get new coverage, especially if you have a pre-existing condition.

Here he is also wrong here, at least to some degree. Yes, if you lose your job and you then exhaust your 18 moths of COBRA benefits and you have an gap of insurance (are not covered by either an employer’s plan or by COBRA or a private insurance plan, a gap of insurance continuation of more than 60 days) and have to find insurance in the private market, yes, the insurer can make you wait a certain waiting period for coverage and or put in exclusions in the policy from some pre-existing conditions.

However under HIPPA, once your land a new job, your new employer and their insurance company cannot deny or limit your coverage based on any pre-existing conditions where as underwriters in the private insurance market can.

That is not to say I think that an entire overhaul of our present tax and health insurance system isn’t in order.

But rash ideas absent a hard analysis of the real consequences of such changes, is IMO an equally bad idea.

He is also IMO ignoring two very important things that very much drives up the cost of health care for all of us.

One being the cost that many private and public hospital ER’s units have to absorb the cost to treat the uninsured (including the care of illegal “immigrants” and more and more of them by the day) and for using the ER for basic and non-emergency and routine care (and even some people with insurance do this by not getting routine and preventative care), and the other being the cost of frivolous “malpractice” suits and the lack of any meaningful tort reform in this area.

FWIW, the last time I went to see my OBY/GYN for my yearly exam, he had this posted in his waiting room; a copy of his malpractice insurance premium bill with a note, that said something like; “Although I have always strived to give each and every of my patients and that of all their babies, believing that every human life is precious, the very best of my care and skills over my 40 years in practice and that I’ve never been successfully sued for malpractice – this is what it costs me every quarter in just malpractice insurance alone. When you ask why my rates and fees for routine office visits have gone up, why my fees for delivering your babies have gone up and why your insurances rates have also gone up, please take a look at this.” And it was staggering – he was paying nearly 250k per quarter, nearly a million dollars a year just in malpractice insurance alone.