Yves here. While this post may seem a bit narrow, the issue it addresses, that of employer-paid insurance, is oft cited as an obstacle to implementing single payer.
Keep in mind that this isn’t just a matter of dollars and cents. “Endowment effect” is a cognitive bias. People are irrationally attached to what they have. One classic study has participants say what they’d be willing to pay for a cheap coffee mug. They are then given the same coffee mug and ask what they’d need to be paid to give it up. The second amount is always a lot higher than the first. That is one of the reasons the Obamacare promise, “You can keep your insurance” was important and customers were upset when it proved to be empty.
By Peter Dorman, an economist and a professor at Evergreen State College whose writing and speaking focuses on carbon policy, child labor and the global financial crisis. Originally published at EconoSpeak
This holiday season I’ve heard several tales of woe from working class acquaintances, mostly self-employed, about Obamacare: how they are just above the subsidy cutoff and would rather pay the fine than buy expensive individual policies, or how they are just below and can’t afford to put in more hours per week. I can understand why there is a lot of disappointment with the Democrats.
So what about single payer? Along with free public higher ed, it’s supposed to be the leitmotif of the resurgence of the left, with even moderate politicians signing on, or claiming to, to save their skins. And I’m all for it too.
But a big political obstacle is widespread employer-based health coverage, a benefit that would disappear under a universal system. As a public employee, I have coverage of this sort myself, and it’s a big part of my overall compensation. How do we fold the millions with adequate-to-good health plans into a new system financed through taxes?
I have an idea. As single payer goes into effect, require every employer to publicly report how much it pays in the form of contributions to employee health insurance, documented by its payment record over the past twelve months. The health care law would then mandate that this sum be returned as added wage payments to employees for some transitional period (such as six months) or the term of the employment contract, whichever is greater. Ideally the law would specify a reasonably progressive apportionment of this payment across the workforce, such as equal lump sums. At the end of the transition, wages increases and decreases would fall under the same employment law rules, such as they are, as before.
From the worker’s point of view, there would be no loss under the switch to single-payer, even if existing coverage were gold-plated; it would generate that much more wage income. To the extent that the new system can reduce America’s bloated medical costs, workers could even come out ahead over time. From the employer’s perspective it should be revenue-neutral, and changes in the composition of the compensation package should have little effect on HR. In principle, then, it ought to address most of the political concern over how we can get from here—a fragmented, employ