Employer based health insurance is the wrong way to go.

Employer based insurance for medical expenses came about in the U.S. largely during WWll when wage controls were imposed to assure that there would be no labor problems during the tremendous effort to produce munitions. In lieu of increased wages Kaiser shipyards offered medical care to attract employees and that started the trend, one that the federal government solidified by making this employee benefit tax exempt. Whatever its merits originally, employer based health insurance today is a net negative.

Despite the illusion that the employer is paying the bill, the health insurance benefit is in reality part of the overall worker's compensation. However, perversely, since someone else appears to be paying, employees want the most generous benefit possible and often fight tooth and nail to obtain what they would consider grossly wasteful if they were paying the cost - which in reality they are. Who would, for example, wish to purchase homeowners insurance that paid for a handyman to come to fix chipped paint or auto insurance that covered oil changes. And who does not seek to obtain lower premiums for these types of insurance by increasing deductibles. Although we might use the handyman or Jiffy-Lube, we all understand that buying insurance for such ordinary maintenance expenses would be an absurdity. But this is the very situation we find ourselves in with our employer based health insurance.

Accepting health insurance from our employers in place of monetary compensation for our labor has many disadvantages. First there is the cost. Although it is easy and pleasant to simply plunk down the insurance card for any medical service, the luxury of not having to shop around comes at a high price. Not only is the oil change at the dealer instead of at Jiffy-Lube expensive but much more than that would be the back end cost of paying by oil change insurance.

In addition letting our employer do the shopping greatly limits our options to the one or two plans he negotiates. Although he for the most part wants to do right by you his eye is on his bottom line and his overall employment pool rather than your individual needs. Worse than that is "job lock". Changing jobs is a big health insurance hassle and how many are stuck in a job they don't like simply because of health insurance coverage.

To be sure the employer based system has some advantages. First there is the tax exemption for the premiums previously mentioned. Secondly group health insurance has big administrative advantages over individually purchased policies and especially if you have some chronic medical problem that can be a big deal. Thirdly is the phenomenon that the employer, at least temporarily, has to absorb the cost of increasing premiums. That advantage however is illusory, since a moment's thought leads to the understanding that such increases replace wages, and of course lead to policies with increasing copayments and deductibles.

These advantages are not worth the defects and are reportedly being addressed in the new health care deliberations. Firstly if we are to have federal tax exemption for health insurance it should go to everybody regardless of employment status. Secondly, any authorized association, such as churches, social organizations or disease advocacy organizations should be allowed to offer group health insurance, and not just employers. Thirdly the market for health insurance offerings should be expanded nationwide. If there was ever a case where interstate commerce laws should apply, this is it.

We should buy our own health insurance that will stay with us regardless of who we work for. And there should be a wide market with various associations allowed to compete with group policies. Purchased this way we would seek policies which covered only large items with substantial deductibles, and with riders that guaranteed coverage of any new unexpected illnesses. We would see much more stable, appropriate coverage with much lower premiums. And we would get wages for our labor instead of high cost, excessive health insurance. This arrangement would go a long way to addressing the "pre-existing illness" problem. But that is a matter for another time.

Obamacare requires every employer with more than 50 employees to provide health insurance. Needless to say I think this is the wrong way to go by 180 degrees.