CEPR - Center for Economic and Policy Research

Multimedia

En Español

Em Português

Other Languages

Home Publications Blogs Beat the Press Is the NYT Lobbying for Senator Wyden's Plan to Undermine Employer Insurance Pools?

Is the NYT Lobbying for Senator Wyden's Plan to Undermine Employer Insurance Pools?

Print
Tuesday, 12 April 2011 21:10

It sure looks that way since it presents the removal of a provision in the health care bill pushed by Senator Wyden as a victory for special interests. This removal was part of the final budget deal.

The provision would have allowed healthy workers to opt out of their company's insurance plans, leaving only older and sicker workers. This is an effective way to undermine employer provided benefits, which was presumably Senator Wyden's intention in pushing this proposal.

While the NYT gave extensive space to Senator Wyden complain about the removal of his provision as a victory for special interests, and gratuitously added the irrelevant information that the provision cost the government nothing, it did not interview anyone who opposed the provision for the article.

Comments (11)Add Comment
What's left of us?
written by JL, April 13, 2011 12:19
Everyone else, except the affluents, is being attacked daily from dumb reporters/media to who-could-never-have-enough.
Rep John Boehner gets to tell NYT Readers:
written by Union Member, April 13, 2011 12:19
"jobs are the American people"s top priority."???????

In a piece about healthcare? Or, what is this article about?

Who does Lichtblau work for?
...
written by foosion, April 13, 2011 6:32
Dean's description is inaccurate.

>>The provision would have allowed healthy workers to opt out of their company's insurance plans, leaving only older and sicker workers.>>

The plan would allow anyone within 400% of the federal poverty level to opt out. It made no distinction based on age or health.

Exchanges may charge less for the young, but so do employer plans.

Wyden's plan seems like a good idea. If you don't agree, please provide an explanation.
...
written by David S., April 13, 2011 7:08
A reply to commenter Foosion:

You are wrong. Employer plans do not charge younger workers lower premiums.

Employer-sponsored health insurance plans charge one premium to all participants in a given plan.

If healthier young people can get a voucher and buy insurance individually, they may get cheaper insurance, but the remaining pool of employee-participants will on average incur higher per capita medical costs. The insurer will then raise the premium which the remaining employees are required to pay, causing more employees on the margin to opt-out with vouchers and leading to a death-spiral well known to the insurance market.

Think of employer-sponsored health insurance as a multitude of mini-single payer health insurance plans. Each employer is like a separate "nation," providing insurance at a price which reflects the average cost of health care among its "citizens."

Now, imagine if an entire country did that, and then cut out the middleman-insurer -- negotiating directly with providers and using its huge buying power to drive down costs. That would be national single-payer health insurance, like Medicare-for-all.

The power of the marketplace, as truly understood by economists, not as distorted by corporate mouthpieces, would work to drive down costs, as the monposonist (i.e., all Americans buying healthcare through one source) does what any monopsonist would do -- drive prices lower.

Combine that with a program to evaluate and pay for only those procedures which are effective, as in the new health care law -- and we would go a long way toward solving our health care cost crisis, which, as Dean always and correctly notes, is also the source of our budget deficits.
What Color Is the Sky On Your Planet?
written by Ron Alley, April 13, 2011 7:33
David S.,

Nowhere does Dean say (or even suggest) that employer sponsored healthcare plan charge younger workers smaller premiums.

Dean's complaint is about the coverage provided by the Post. Dean asserts that the reporter wrote a slanted article that ignores the reality underlying the Wyden provision and chalks up a well-deserved defeat to "special interests".
...
written by foosion, April 13, 2011 8:04
David,

Even you are not claiming employers discriminate according to the age or health of the employee.

My company does not charge everyone the same. It charges more by pay level, which correlates with age.

Exchanges are likely to have more market power than individual employees, so moving more people to exchanges could help drive down costs. Unfortunately, single payer is not available at the moment.

Moving from an employee to exchanges would also increase employee mobility and therefore bargaining power. This would be a good thing.

Employer based tax breaks are regressive. Exchanges would subsidize low income participants.
...
written by liberal, April 13, 2011 8:15
foosion wrote,
Even you are not claiming employers discriminate according to the age or health of the employee.


So? David S.'s point is standard knowledge among those of us who have an understanding of health insurance. If you have a pool of insureds, and you allow opt-out, then the healthier insureds will opt out. That will jack up the premium needed to cover the now-sicker pool, because the pool is on average less healthy. With this higher premium, some insureds healthier than the average in this newer pool will opt out. And so on, leading to a death spiral.

Again, this is basic background knowledge of health insurance markets.

Why do you think Obama's health insurance reform includes a clause forcing non-covered individuals to join?
...
written by foosion, April 13, 2011 9:23
>>If you have a pool of insureds, and you allow opt-out, then the healthier insureds will opt out. That will jack up the premium needed to cover the now-sicker pool, because the pool is on average less healthy. With this higher premium, some insureds healthier than the average in this newer pool will opt out. And so on, leading to a death spiral. >>

Of course. So what? Even if true, why would people moving from employer insurance, a highly flawed system, to exchanges be a bad thing?

Employer based healthcare is regressive (tax deductions are more valuable at higher incomes), lowers the ability of people to switch jobs or retire and can be expensive, especially for employees at smaller companies. Exchanges seem better on all levels.

Going back to the original point, Wyden's plan does not force older and sicker workers to stay with employers while allowing the young and healthy more freedom. The trigger is income, not age or health. The would likely to be to strengthen exchanges, which would be good.

Wyden would require employers to offer vouchers to workers who earn less than 400% of the federal poverty level and whose contribution to the employer’s coverage plan would fall in a certain range.

>>The provision would have allowed healthy workers to opt out of their company's insurance plans, leaving only older and sicker workers.>>

None of the alternatives discriminate on the basis of the health of the individual. Can we agree that this part of the original post is incorrect?
...
written by foosion, April 13, 2011 9:27
>>>>If you have a pool of insureds, and you allow opt-out, then the healthier insureds will opt out. >>

On second read, this is a bit off. There's no opt-out, just the ability to move from employer to exchanges. Exchanges would not be able to price according to health and neither would the employer plan.

Insurance and Subsides are Not the Same: The Sham Death Spiral
written by izzatzo, April 13, 2011 10:22
The insurer will then raise the premium which the remaining employees are required to pay, causing more employees on the margin to opt-out with vouchers and leading to a death-spiral well known to the insurance market.


The death spiral sham is peddled by private health insurers to justify their failed market role as bill collectors rather than true insurers.

True single payer is efficient because it cannot and does not attempt to incorporate risk as a private insurer would do if subject to effective competition in markets free of failure.

Older and sicker customers of health insurance are not a random risk compared to younger and healthier ones. They're a highly predictable known risk, which is just a straightforward higher cost expected to be incurred relative to younger customers.

That's why single price-pay plans across a pool containing both groups is not true insurance, instead acting to redistribute a subsidy extracted by the insurer or employer from the younger group to the older group on behalf of health providers who charge the same price per procedure for everyone in the pool.

That makes the insurance provider a bill collector with income redistribution power rather than a true insurer. This is a primary reason why private health insurance in the USA has become a massive market failure.

True single payer eliminates the false pretention of insuring highly predictable known risks by acknowledging they are true subsidies and have little to do with random risks.

True single payer bypasses insurers altogether by setting unitary prices and procedures that will be covered and received by health care providers which also covers true random risks primarily within groups otherwise separated by well known high risk distinctions.

This is not the same as countervailing forces of private monopsony insurers acting to offset private monopoly power of health providers. They don't because the result still contains huge economic rent distributed to themselves, whether in the form of fraud, waste or sheer market power.
vibram five fingers
written by vibrams five fingers, April 13, 2011 10:08
http://www.vibramfivefingersshoesusa.com/
Do you like vibram five finger shoes, now it is very popular and has many fans, if you like it, don't wait but choose it. http://www.vibramfivefingersshoesusa.com/

Write comment

(Only one link allowed per comment)

This content has been locked. You can no longer post any comments.

busy
 

CEPR.net
Support this blog, donate
Combined Federal Campaign #79613

About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

Archives