The economics of health care will continue to rationalize.
Before WWII, everyone paid their own health care.
Employer paid health care rose during the boom '50s and '60s. This was the era of "infinite health care". Doctors were imagined to be above being driven by money. But it quickly became apparent, if you let a person set his salary, he'll set it high. Way high. American doctors became, by nearly an order of magnitude, the best paid in the world.
The rationalization process began in ernest during the '80s, as employers began to do business with the HMOs and then the PPOs. However, a crucial bit of irrationality remains to be addressed: some employees are far more expensive than others to provide medical care to. This will ultimately crack, as companies which figure out a way to mitigate if not eliminate that subsidy are able to out-compete those who don't.
Think of if this way. Say an employee doing job 'x' is worth, without insurance, $60,000 per year, and our company needs ten such employees. If we hire ten reasonable-cost employees, we can insure them for $500/year each, average compensation to the employee is then $59,500. If, however, one of those employees consumes $25,000 per year, year in and year out, then the cost to insure the ten employees will be $25,000 + 9x$500, or $29,500 per year. Divided over the ten employees, their pay will drop to $57,050 to remain competitive.
And that company faces a competitive disadvantage in attracting employees. Ultimately, the company will rationalize this situation, or it will perish in the face of competition which does so.
The economics of health care will continue to rationalize.
Before WWII, everyone paid their own health care.
Employer paid health care rose during the boom '50s and '60s. This was the era of "infinite health care". Doctors were imagined to be above being driven by money. But it quickly became apparent, if you let a person set his salary, he'll set it high. Way high. American doctors became, by nearly an order of magnitude, the best paid in the world.
The rationalization process began in ernest during the '80s, as employers began to do business with the HMOs and then the PPOs. However, a crucial bit of irrationality remains to be addressed: some employees are far more expensive than others to provide medical care to. This will ultimately crack, as companies which figure out a way to mitigate if not eliminate that subsidy are able to out-compete those who don't.
Think of if this way. Say an employee doing job 'x' is worth, without insurance, $60,000 per year, and our company needs ten such employees. If we hire ten reasonable-cost employees, we can insure them for $500/year each, average compensation to the employee is then $59,500. If, however, one of those employees consumes $25,000 per year, year in and year out, then the cost to insure the ten employees will be $25,000 + 9x$500, or $29,500 per year. Divided over the ten employees, their pay will drop to $57,050 to remain competitive.
And that company faces a competitive disadvantage in attracting employees. Ultimately, the company will rationalize this situation, or it will perish in the face of competition which does so.