Ending the health care disconnect and expanding choice

Health care consultant Dr. Brian Gould:

Even insurance itself isn't purchased in a real market. For those who obtain medical insurance as an employee benefit, they don't "purchase" it at all. They select from a limited menu of carriers and coverage plans provided by their employer. The purchasers of individual policies are real buyers, but they're usually limited to the one or two carriers in their local area who offer this type of policy. A third group -- enrollees in one of the government programs -- do not get to choose at all. They are matched on the basis of a particular qualifying attribute -- age, income, level of disability, or presence of a special need.

These are some great points that need to be stressed -- most people suffer from a real lack of choice. This is because either they can only choose from a limited number of insurance options provided by their employer or limited by their geographic location. Fortunately there is a simple remedy: remove the linkage with employment by ending the tax deduction for employer-provided health care (either entirely or -- more realistically -- replacing it with an individual tax credit) and allow the purchase of health insurance across state lines. The latter would be cost-free to the government while the former could either be revenue positive (taxing benefits) or neutral/slightly negative (individual credits).

I also believe that the linkage with employment causes a disconnect between people and their insurance, leading to a lack of familiarity about the benefits they have. I strongly suspect that when people receive insurance from their employer they simply assume they are "covered" and only realize a plan's shortcomings when a health-related event occurs, by which time it is too late.

I would wager that more people know how many free text messages are included in their cellular phone plan than know what is covered in their health care insurance. By making people shop around for their policy you are more likely to have informed consumers that know exactly what they are paying for and reducing the number of unpleasant surprises.