Health insurance firms are essentially monopolies because employers, not individuals, choose which plans to offer. This freedom from competitive forces has allowed insurance to become flaky and opaque—and the reform currently being debated in Washington would do little about it, writes David Leonhardt for the New York Times. Even if a public option were to be created, people with employer-based insurance would be ineligible.
Senators Ron Wyden and Robert Bennett proposed a voucher system in 2007 that has come closest to giving people real choice, but it went nowhere. Support for the employer-based system is strong because taxes and wage deductions hide its true costs from employees, while politicians worry about the dangers of giving ordinary folks “too much” choice. But if the insurance companies were doing a good job, employees would probably stick with their existing plan. And if not, they’d deserve their fate.