Employer health plans are getting pricier and skimpier

Payroll taxes are another matter to me, that's mostly window dressing. Either employer pays the tax to the government, or pays it to employees and they pay it to the government. The outcome is the same.

I think payroll taxes exist mostly to hide the amount of taxes they pay from the population.

If insurance costs $500/mo, either your company can pay the premium for you directly, with no taxable event for you; or, they can give you $500 more as a part of your salary, but the government will take $150 of that (or whatever, depending on your tax bracket), and then you have $350 to cover a $500 expense.

Individuals can deduct medical/insurance payments on their taxes every year, but: 1) the rules are complicated with some payment minimums that mean a lot of people couldn't take the deduction at all, and 2) you have to come up with the extra $150 every month for 12 months before you get that money back (since the US tax system is pay-as-you-go with per-paycheck withholding), which is a real burden for many Americans.

Alternatively, your company can give you $715 per month, the government will take $215 of that in taxes, and then you have $500 left over to pay your $500 insurance bill, but: 1) your company would very much rather pay $500 instead of give you $715, and 2) that $715 is actually not a hard number, but will vary depending on each employee's personal tax situation, which can change throughout the year, and your company likely doesn't care to deal with that (this is less of a big deal, since it could be outsourced to a piece of software written by a payroll company).

Why do Americans put up with this? Many of them (most?) just don't understand how this all works, and so don't even know they're getting screwed. Many have no concept of systems in other countries that handle this better, in part because they don't travel and don't have friends or family abroad, but more because of concerted misinformation campaigns around any kind of changes to our health care system that would threaten the incumbents.

I guess big business doesn't "prevent" alternative insurance companies; there are plenty of available options for insurance that individuals can purchase on their own. But it generally costs more (because you're not an HR benefits person negotiating on behalf of your 500-, 1000-, 50000-person company), and you end up with the bad tax consequences described above.

If you're an enterprising individual who wants to set up an alternative insurance company that charges very low premiums for great plans, you run into the problem of having no negotiating power with health care providers, who are used to charging high prices because the traditional insurers will pay them.

There are plenty of medical conditions where there are several options for how to manage it. With insurance, people usually choose based on risk of failure or complications, recovery time, etc. Without insurance, someone might choose primarily based on price, and a poor person might go for the cheapest option. For some non-life-threatening issues, a poor person might refuse treatment if the cost for even the most minimal intervention is too high.

This is obviously not what we want -- ideally, we want some reasonably-high minimum level of care so people don't have to choose between, say, starvation and permanent disfigurement -- so, as the parent says, we don't want health care to be exactly like a grocery store, but this kind of thing would be more like a free market for health care.

(And even in your example, you still have to buy and eat that ramen. Sure, you don't have to pay for steak, but you have to buy something. You can't just walk away from the transaction entirely.)

The history: wage-price controls implemented during WWII as labour was taken up by the military and companies had to find some basis other than pay on which to differentiate. Benefits, including health care, were excluded from wage consideration.

Insurance itself is the business of assessing, managing, and sharing (or "pooling") risk. In the case of health care, the typical costs that a given population will face are predictable based on age, gender, and various exposures. Given a sufficiently large number of people, a group or policy cost can be assessed. Along with other groups, this results in pooled risk.

I'm not an actuary, but "large pool" risk is fairly low, I suspect it's on the order of 30 or so people. Smaller pools can be formed (or more likely: aggregated to form larger ones), down to a small number of members, as few as a handful or so.

The idea being that in any given pool, what's called "adverse selection" (people specifically looking for insurance due to high risks) are less likely -- you're dealing with the average population.

In individual markets, all of this becomes much less predictable, and/or the transaction and administrative costs of individual insurance simply add up.

Since a large share of the population works, or lives in a household with someone who does, allocating healthcare group insurance through employment has more-or-less stuck in the US.

The fact that it provides yet more leverage and control by employers over employees is another factor, of course.

Source: A long time ago in a galaxy far, far away, I studied this at uni. Plus more recent experiences / exploration.

US defense spending is by far the highest of any other country in the world, and renowned for its wastefulness.

Social Security is going bust whenever we talk about it, and is merely a program which confiscated money today, in order to hand it out tomorrow, and doesn’t even invest it in the meantime.

And which half of government is it that’s capable of passing legislation again?