Employer Based Health Benefits

Economics Economics Questions
1

Can anyone support or illuminate a conjecture of mine that health care costs began to spiral out of control once employers began offering health benefits. This had an initial desirable implication of attracting and keeping talent, but it theoretically could raise costs and thus there was an incentive for non-insured to pursue work with health benefits, thereby further plugging subscribers into a pool rather than a free market. This was only excerbated when the government thought “great idea, everyone with X amount of employees have health care”. Low income governmetn subsidized healthcare only went further to raise the floor.

I’m an engineer, please don’t beat me up…

2

Employer health benefits are a form of socialism, created in response to wage controls preventing employers from competing for labor.

3

From the Peter Schiff videos on youtube, if the employer gives someone more cash in salary it is taxed. But if he gives him more cash in the form of paying for his health insurance, that is not taxed.

Thus it became popular to offer to pay an employee part of his salary in the form of picking up the tab for his health insurance. The employee likes it, because he gets more. The employer likes it, because he will be paying out the same amount of money anyway, but now his employee is happy. The insurance company likes it, because they can offer much more [i.e. expensive and uneccessary items] insurance than they would if it was selling straight to the employee and he had to pick up the tab. But this only raises the price of medical insurance. Medical treatment is something else.

The real problem that shot health care prices through the roof was medicare and medicaide. The rule is whenever the gov subsidizes anything [student loans, health care, housing, to name the big 3] prices of it go up. This is because of the law of supply and demand. When demand goes up, prices go up.

Now demand means not just that I want a thing. After all. if I get up in the morning and want a yacht, that does not change anything in the real world if I can’t pay for it. “Demand” in an economic sense means I want it and can pay for it. Ergo, when the gov’t is paying for things, demand for them goes up, and therefor so do prices.

So that Obamacare, sure as shit, is gonna shoot prices through the roof. It’s happened in every country that has socialized medicine. What do they do to keep prices, and therefor taxes, from totally crushing the economy? Very simple, charge say $10 for a level of healthcare that today costs a dollar. So that you may be paying less in total for your health care bills, but you are getting far far less for your money.

And we’re not talking about going from three bandaids to two. The horror stories abound. Lewrockwell.com has one just today. A universal problem that no one can deny is long waiting lines, as in months. If your horse gets the same disease as you do, the horse will be treated today and you will be treated in 6 months. That one was in Canada. I’m sure you will have no problem finding many many more.

4

I’m not sure how it’s a form of socialism, if it’s a voluntary agreement between two parties.

5

Thanks all. I get so frustrated people can’t see why health care is the way it is…

6

Socialism is the distribution of benefits based on someone’s membership in a society. Instead of paying employees in cash, which would give them full discretion on how they purchase medical care, the employer decides for its employees how their health care will be provided. This implies control of the employer over the life of his employees.

It’s doubtful that it was truly “voluntary”, as the employers were not allowed to raise case wages due to wage control laws.

7

Perhaps it isn’t socialism, but the 2 parties “voluntarily” arrived at that agreement due to incentives distorted by the government (tax law and wage controls).