How Do Americans Pay for It?

March 22, 2008 -- In America, most health care insurance premiums are paid by employers. Workers receive them as a job benefit. There are several problems with the American scheme.

The first problem is that the cost to employers rises with each new employee they hire. (Increasingly, this cost is also born by the employee who today is often asked to share it, but that is a topic for another discussion.) Thus, it is a kind of employment tax.

Enlightened tax policy is driven by decisions about activities that, for the good of society, we want to discourage. For example, we have sin taxes to discourage consumption of tobacco and alcohol. Employment is not one of those! We want to encourage employers to do it! Thus, if we could find another way to fund health care in America, we could have more jobs. Who would argue against that?

Another problem is that in this system only employed people (and the relatives thereof) are covered. When the economy is strong and provides full employment, coverage almost suffices but in leaner times, even more are left out. Indeed, no one must be left out, in lean times or good.

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