[vec]

> We do not have a free market. Most people get their health insurance from their employer - you cannot reasonably get insurance elsewhere

What you are describing are in fact the freest parts of the health insurance market.

Employers, quite rationally and of their own free will, choose to offer health insurance as a benefit because it attracts and retains talent better than other similarly priced incentives. The fact that you're hesitant to take a leave reveals that it's working.

Insurance companies, quite rationally and of their own free will, choose to offer steep discounts to purchasers who buy for a large group of people instead of just one or two. It reduces their marketing costs and gets them a better balance between sick and healthy clients.

You, quite rationally and of your own free will, choose to both accept your employer's offer of discounted insurance and to remain at your position longer than you would otherwise prefer to maintain that insurance coverage. In fact, the only thing you foresee changing the status quo and allowing you to retire at all is when you become entitled to benefits from the state in the form of Medicare.

Nothing in the phrase "free market" implies the resulting equilibrium won't conspire to limit an individual consumer's choices.

[pitaj]

> Employers, quite rationally and of their own free will, choose to offer health insurance as a benefit because it attracts and retains talent better than other similarly priced incentives. The fact that you're hesitant to take a leave reveals that it's working.

This is false. Offering insurance as compensation started during WWII when wages were frozen by the government. Employers found other ways of attracting workers.

There is also the fact that employer-provided insurance is almost entirely untaxed. A dollar in direct employer insurance is essentially a dollar directly to healthcare spending. If it goes through to the employee, that's reduced to at most $0.70 due to payroll taxes, and often much lower. This provides and incentive for both employers and employees to prefer employer-provided insurance.

Compared to these, the effects you described are negligible.

[vec]

> Offering insurance as compensation started during WWII when wages were frozen by the government.

Absolutely true, and those regulations haven't been in effect for the better part of a century now.

If you want to argue that long-discontinued government programs can entrench systems that continue to produce market distortions today then I'm happy to agree with you, but that's the exact stated rationale for the broad suite of civil rights regulations that in my experience most libertarians oppose on economic freedom grounds. I don't think you get to have it both ways.

> There is also the fact that employer-provided insurance is almost entirely untaxed.

Again, true. But I think you're drastically underestimating how beneficial it is to an insurer to cover groups of mostly healthy people (i.e. a company's entire labor force) instead of groups of mostly sick people (i.e. those most motivated to acquire private health insurance).

In order for the market for healthcare to be truly free, in the sense you're describing, medical professionals would need to be willing to consistently refuse service to people who can't pay, which is frequently in violation of their professional ethics. Since that (entirely private and voluntary) market distortion isn't going away any time soon, insurers who can find other mechanisms to incentivize relatively healthy people to contribute to the risk pool can provide the same coverage at a lower cost per person.

That means that, tax incentive or no, insuring a broad cross section of mostly healthy people as a group is always going to be cheaper than insuring them individually. And the more healthy people can be incentivized to sign up, the cheaper it becomes for all participants, which gives whoever is making decisions on behalf of the group an incentive to encourage as much of their potential pool to participate as they can. The taxes reinforce this system, but it would still be self-perpetuating without them.

[pitaj]

> The taxes reinforce this system, but it would still be self-perpetuating without them.

Prove it. You are making the positive claim. You have the burden of proof.

[vec]

"Compared to these, the effects you described are negligible" is also a positive claim, and I did at least as much work sketching out why I believe my claim as you did sketching out why you believe yours.

[pitaj]

My claim is not positive. My claim is that employer provided insurance is unlikely without government involvement. That is a negative claim.

Your claim is the opposite. You can prove it by showing that employer provided insurance started growing before the given government involvement.

I doubt that evidence exists.

[vec]

I don't dispute that the current status quo emerged as a direct result of government intervention. Again, I agree with you that it can be traced back to WWII era wage controls.

My claim is that, once established, the resulting equilibrium is economically stable. Your claim, as I understand it, is that it's not.

Given that the price controls that we agree created the current status quo were replaced by significantly less coercive tax incentives decades ago and to the best of my knowledge the industry hasn't attempted to realign away from employer-provided insurance since then, I don't see a reason to privilege your hypothesis over mine.

[ams6110]

Employers offering health insurance as compensation is a legacy of wage controls from WWII. Employers were prohibited from paying market-level wages so they offered health insurance. It is entirely a result of non-free-market government controls.

[krupan]

"Employers, quite rationally and of their own free will, choose to offer health insurance as a benefit"

Sorry, it's because of tax breaks, not pure rational free market. All the rest of what you describe are unintended consequences of that non-free-market tax break that seems like such a good idea on the surface.

[isoskeles]

> quite rationally and of their own free will

Is this the magic phrase that means "free market" to you? Because the word "free" is in it?

We could say that the USSR, quite rationally and of its own free will, sent millions to the gulags and forced labor camps to create widgets. Cute, right? Hey, they did it quite rationally (after all, the labor is way cheaper when you're using prison camps) and of their own free will, therefore it's the free market!

[vec]

We can't say the prisoners chose to enter the gulags of their own free will, though. Since freedom of contract requires all parties to enter into the agreement consentually, that means that the market for gulag laborers is not free.

The US governent does create incentives which change the optimal behavior of rational actors in the health insurance market, but those actors still have very broad latitude to respond to those incentives as they see fit. That's not perfect economic freedom, but it's a lot closer to it than the systems most other countries use. It also gets noticeably worse results on a broad variety of metrics than the systems most other countries use. Make of that what you will.

[vkou]

And the reason that healthcare costs $1,000/month, is because this system has caused prices to spiral completely out of control, beyond the level of lunacy. Due to multiple agents in the market behaving of their own free will.

Every other developed country manages to provide equivalent care for a fraction of the price. So much for the free market optimizing for better outcomes, eh?

[narag]

It's about the same price, except you're totally covered and it includes your pension. Oh and you don't even see the money, it's paid by your employer directly.

[bluGill]

You are missing one critical point though: If I through my own free will decide that I want a different plan I need to come up with that $1000 difference that my employer is kicking in for me. If I could get that $1000 back to spend on my own I'd have the ability to choose a $1300 plan instead of the $1200 plan (for $1100 because of the factors you sight), that extra $200 out of pocket is much more affordable than the extra $1200 I have to come up with now. Or maybe I don't want all the perks of my work plan would want a $1000 plan that doesn't cover something in the work plan.

[vec]

Gee, that sure does sound like a private dispute between you and your employer to me. If you want to opt out of your company's health care plan then you're more than welcome to go attempt to negotiate with your manager about raising your salary by the amount of their health care contribution. Best of luck to you.

[abtinf]

Such an agreement would likely be illegal under federal law, creating the risk for regulatory and civil sanctions for the employer.

[null000]

The ACA has provisions for employers giving money to employees so they can buy from the exchange, iirc.

[seanmcdirmid]

Group plans distort the risk pool and are disallowed in countries like Switzerland that require health insurance. The major problem with the ACA is that they didn’t eliminate employer group plans, leading to an apartheid like situation where those higher income people having a discounted rate because the group pool they are in is much safer than the pool poorer people on the individual market are put into.

What is worse is that poorer people in the individual market can’t even get a tax break for buying health insurance (not until it becomes 10 percent of their income and they decide to itemize). In contrast, employers buy health insurance for their employees tax free. This literally screws poor people in service jobs by making them actually pay much more for health insurance (even including what the employer would pay).