Is it because of tax benefits or something similar? If so, couldnt the government provide the same tax benefits to individuals to make healthcare insurance more affordable to everyone?
disclaimer: I am not from the US
In: Other
Employers benefit massively from the existing system, so why would they stop using it?
First – it forces employees to stay with the employer, generally the longer you work at one place the more efficient (and thus profitable) you become. By holding benefits over your head, companies are able to make it much more difficult to leave
Second – if they were to “just pay you”, people would realize how little companies pay for insurance and how much of the burden of insurance is shifted to the individual. Most small to med companies are paying 50% or less of the health benefits for their workers anyway, and most larger ones are getting huge discounts on their portion while passing increases onto the employees… so to pay a “go find it yourself” wage increase would cost the company much more
Third – Taxes – employers pay taxes based on wages paid to employees, they do not pay these taxes on health care benefits, so it is cheaper for employers by a LOT to offer benefits as a perk. For example – Social Security tax is 6.2% of the wage of a worker, Medicare is another 1.45. So for every 1.00 paid to an employee, it costs at least 1.075 to the company… every 1.00 they pay to benefits actually costs much less (based on their tax situation)
so basically, like everything else in the US… why is this a thing still? because 95% of the benefit goes directly to the .1% of richest Americans who decide our laws
if you pay out of pocket:
1) if you haven’t saved up enough you need a costly loan
2) without the leverage of a big ensurer you will pay the maximum price everywhere.
So… the current answer is history, tax policy and the consequences of doing things a certain way for a long time.
The “why did this start” answer “insurance” works better like this. If a large company, union or somesuch goes to an insurance company for a quote… the insurance company can assume that average health costs will be average and price accordingly.
When an *individual* went to an insurance company for a quote, that individual might be seeking insurance specifically because they have high health costs. They can’t just assume average health costs. This was especially true before health insurance was the norm. At that point they try to figure out how healthy the patient is and “insurance” stops being insurance and starts just being “service cost.”
Health isn’t random enough for insurance to work smoothly, without some sort of aggregation method. That’s why this got started. From there… decades of history, policy, norms and whatnot
Historically, this also benefitted the insurers, as a way to weed out the sick. The very sick often cannot hold a full time job, so they were excluded from the insured pool. One chronically ill individual could wipe out the profit from hundreds of healthy ones. Buying insurance as an individual was generally expensive and full of pre-existing condition exclusions to mitigate that.
I had an employer promise this upon my hire awhile back, they paid a little bit over local industry standards, but the difference was barely enough to get a very basic plan with massive copays and no dental or vision or other options the first year or two.
However after hire, raises weren’t anywhere enough to keep up with the rising insurance prices and basic inflation.
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