Employer-sponsored insurance: few choices

ball & chain Supporters of employee-sponsored insurance (ESI), such as union bosses, should consider whether it results in consumers finding an insurance plan that fits their needs. Consider what Michael Cannon of the Cato Institute writes in his paper on how to eliminate the tax distortion that has created it:

In 2007, 51 percent of covered workers had only one health plan choice; only 17 percent of covered workers had more than two choices (Kaiser/HRET, 2007). Because it is rare that a firm can satisfy the diverse preferences of all its employees, an employment-based system of health insurance leaves many workers’ preferences unsatisfied. The mismatch between the coverage that employees prefer and what they get creates a welfare loss estimated at 5-10 percent of health insurance expenditures.

Cannon’s paper is about “Large HSAs,” which is a better, but probably less politically viable, alternative to McCain’s plan.

To compare, I went to eHealthInsurance.com and looked at the available plans based on my age.  There were about seven companies offering almost 100 plans.  Not that everyone of my age would be eligible, but surely more than three would remain for most people.


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Filed under insurance, tax code, HSAs

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