I moderated a panel discussion yesterday afternoon at the New American Foundation about the DIY economy, and one thing my panelists from Kickstarter and Etsy agreed on was that the kind of work their clients do would be much improved by a severing of the link between health insurance and employment. Similarly, a bunch of people on Twitter today are making the smart observation that the contraceptives/conscience controversy highlights one of the considerable costs of the employer-based insurance system.
And I agree with all of that. What I tend not to hear is any acknowledgement that in the winter of 2009-2010 a major piece of health reform legislation was enacted that, among other things, is aimed at addressing this. You’ve probably heard, for example, about ObamaCare’s tyrannical individual mandate. Well the purpose of that mandate—like the mandate that was an important feature of Mitt Romney’s pioneering health reform in Massachusetts—is to create a situation where, starting in 2014, it will be easy for people to shop for an insurance plan on the individual market without being beset by adverse selection problems. At the same time, the plan is financed in part by partially rolling back the tax subsidy for employer-provided insurance. In conjunction, these two measures should steadily erode the employer-based insurance system and shift us into a system built around a regulated individual market.
Now maybe you like the Affordable Care Act or maybe you don’t like it. Maybe you think the ACA wasn’t aggressive enough for your taste in terms of making this switching. Or maybe you’re one of the millions of insured Americans who’s more-or-less happy with her family’s existing coverage and is glad the ACA won’t cause too much in the way of short-term disruptions. But however you feel about it, this law passed and whether or not it’s implemented is one of the major questions on the ballot in 2012. That reality should be the starting point for discussion about the insurance/employment link. Straight repeal of the ACA would strengthen the link, but you can also envision many non-repeal modifications to it that would hasten the transition. That would be a smart thing to be talking about, given that the basic undesirability of the employer-based framework is something that an ideologically diverse group of people generally believe in. But to get there you’d have to move past the polarized repeal/implement debate and actually start talking about specific new legislative vehicles that could move forward. You might, for example, proposing scrapping the ACA’s higher taxes on investment income and replacing the lost revenue with a more assertive repeal of the tax subsidiy that large group insurance plans currently receive. Lots of liberals wouldn’t like that, but conservatives generally should and I’d gladly take the swap.