Peter Orszag, President Obama’s former OMB director, has a rather depressing column in which he predicts the future of health care in America. He thinks employer health care will go the route that private pensions have gone, being replaced by individual 401(k) plans. He also thinks the Affordable Care Act he helped create will accelerate this trend. From Bloomberg:
The market today is dominated by “defined-benefit” plans, under which companies determine a set of health-insurance benefits that are provided for employees. These will gradually be replaced by defined-contribution plans, under which companies pay a fixed amount, and employees use the money to buy or help pay for insurance they choose themselves.
If most employers do retain their health plans, the state insurance exchanges created under the new federal health-care law will make the basic idea of a defined-contribution health plan more prevalent, and thus may speed its adoption. The regulations written to carry out the new law will determine how things play out. If defined-contribution plans that are sufficiently generous count as employer-based coverage — as is generally expected — the trend toward such plans will probably accelerate.
For the most part I agree with Orszag’s basic conclusion about where health insurance in this country is likely going. The great risk shift to powerless individuals has been taking place for years across all aspects of American life. I see no reason the trend shouldn’t continue, and I suspect the ACA will speed up the process in health insurance. The goal of the Obama administration and many of its top defenders on health care seems to have always been to force everyone on to some form of private insurance exchanges.
Orszag thinks this is a good thing, because he believes in the free market economagic idea that very sick people, acting individually, make for super savvy consumers of incredibly complex products offered in flawed markets.
Of course unlike Orszag, I consider this a terrible trend, because my health care theories are based on decades of historic international data instead of fantasy thinking. I consider the shift of the burden of health care cost on to working class Americans a tragedy and a reason why the ACA is deeply flawed. Individuals have basically no market power compared to near monopolies like insurers and providers, and they will fall victim to the massive information imbalance involved.
With even Obamacare’s top defenders saying the law could speed up the trend of employers shifting the burden of health care risks and costs onto employees, is anyone actually surprised this law isn’t popular?