Why isn't health insurance a commodity item like other forms of insurance (ex. auto)?

Question

I could essentially have the same provider for auto insurance all of my life. Why is health insurance so heavily linked to one's employer? It would much easier so have the same health insurance for years or decades so no worry about pre-existing conditions when changing employers and health plans. With more competition, rates would be lower. Employers could still offer employees some health insurance money to cover premiums as a benefit. I'm not advocating socialized medicine as I don't believe the gov't is very effecient at running any sort of program.

Answer 1

In the past, a long time ago, when income tax rates were more than 70% for the highest income earners, employers put a lot of time and effort into finding the best tax breaks for their employees, because it was an important part of their compensation. Health insurance is one expense nearly everyone has. The employer can justify it as a tax break because healthy employees are more productive.

So health insurance became a standard fringe benefit. One everyone expected. Old habits die hard. It's no longer so useful as a tax break, but it survives from momentum.

Answer 2

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Answer 3

It would be much more difficult & expensive that way. Instead of $150 every 2 weeks, you would be looking at $200 every week! that is a substantial difference. You also have the fact that you get bulk discounts through the job. If your employer has 1000 people covered, they can demand a beter cost than 1 person can. Just like your car insurance, you get a discount for more than 1 car. There are 2 discounts you get when you go through the employer: 1. group rate 2. employer contribution, which could be 50% or more. You also could consider that you get the tax break also b/c it is pre-tax dollars to pay for it.

Besides, through your employer, you also are taken as is, meaning you dont have to qualify for coverage. If you work there you are covered & this is the rate, no questions asked.

There is nothing stopping anyone from purchasing private insurance. It is available, but boy does it cost!

Answer 4

Well, you PAY for your own auto insurance. If you PAID for your own health insurance, 100%, it would be the same way.

Most people prefer their employers plans, because the employers usually pick up anywhere from 50% to 100% of the costs, AND the employers pick up the majority of the premium increases from year to year. But there is NOTHING STOPPING YOU from buying a private BC/BS health insurance policy, and just keeping THAT forever!!

Rates WON'T be lower, though, due to "competition". Insurance rates are going to be tied to what the insurance companies pay out - which is tied to the health (aka, preexisting conditions) of the consumer, and the level of medical treatment people on the whole request.


So as long as people demand insurance companies pay for weight loss surgery, and sterilization, and sterilization reversals, and cosmetic surgery, and IVF, and all those other voluntary procedures . . .. and as long as they refuse to lose weight on their own, control their diabetes, quit smoking, and quit talking on the cell phone while they drive, they will be dissatisfied to either be turned down, or pay much higher premiums for all the extra services and medical help they will be using.

Answer 5

The main reason is that the typical employer picks up a significant portion of the health insurance premium. Can you imagine trying to pay for family health coverage premiums of $1,000 PER MONTH instead of a couple of hundred?

In addition, Employers get significant tax breaks for offering health coverage and employees get the benefit of being in large groups that pushes down premiums and increases coverages compared to individual plans.

Answer 6

because you can go your whole life without getting in an a car accident, but you go in a least once a year for a physical. the reason they keep the system the way it is now is so that the risk is spred among a pool of employees. most people have a job and don't need a individual policy. the rest are usually covered under a government program. the self employed are usually out of luck.