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Book Review of: The End of Employer-Provided Health Insurance
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The End of Employer-Provided Health Insurance, by Paul Zane Pilzer and Rick
Lindquist (Hardcover, 2014)|
(You can print this review in landscape mode, if you want a hardcopy)
Every employee, employer, and small business owner (even if not an employer) should read this book. If you do not have a copy, you need to get one.
Here's what it's about. The authors make a clear and compelling case that an employer-provided medical insurance plan is not good for anyone but the insurance companies. The fact that this insurance harms employers and employees has, actually, been the case for quite some time. The Unaffordable Care Act (UCA), however, makes this faulty product an even worse deal. This book is a comprehensive guide for employers to offer an alternative to an employer-provided medical insurance plan and it also helps individuals understand how to get started on signing up for an individual insurance plan under the UCA.
Personally, I found this book really cuts through the clutter and confusion surrounding how to respond to the UCA. The authors make it clear what to do and why. The book even motivated me to actually go online and (try to) find what my insurance rates would be with the UCA subsidy. Unfortunately, the Website doesn't work; after multiple attempts to get this information, I finally gave up. Despite that, it is clear to me how to proceed if the UCA exchange thing ever makes financial sense for me and the Website ever gets fixed so it provides the information. Previously, I had no idea what to do to even start the sign-up process (I hadn't made any effort to find out).
I don't want this review to get bogged down by addressing this book's language issues early on, so that commentary comes after the main body of the review. There is also a misconception about the UCA; I will go into that after the main body of the review, also.
This book shows why employer-provided insurance is no bargain, rate-wise. In fact, the rates are vastly inflated over what an individual would pay. Most employees don't understand that their paycheck is only part of the total cost their employer pays for their services. An employer can pay so much for an employee to do a given job; the total is the burden rate and it's much larger than the employee's wage. Total costs of paying for an employee include all of the payroll taxes (among other things). Add in a big wallop for the "employer paid" portion of jacked-up insurance rates, and the employee must work for much less take-home pay thanks to this "free" benefit paid by the employer.
There are other problems with employer-provided insurance, also. And they have been around for a very long time. I remember one situation in which a coworker was badly treated by our boss. He got all the sh** jobs, and often toiled long after everyone else had gone home. Not only that, the company never gave him a raise and the wage gap compared to his coworkers had grown to be huge. I asked him why he put up with this, and he said he could not afford to quit because he needed the medical insurance to cover his terminally ill wife.
If only he'd had private insurance, but no company calling itself an insurance company would give them a policy. One of the few good things about the UCA is it ended the "pre-existing condition" excuse for insurers to play the insurance game selectively.
Yes, I realize we all pay higher rates if people with illness are covered. But I see that as a cost of participating in a system that is supposed to spread risk and cost. This selective insurance gaming should never have been permitted under law, and it's immoral in the extreme. You are either an insurer or you are not; picking and choosing makes you a predator rather than an insurer.
The authors pointed out that with employer-provided insurance, the insurance companies insure all employees regardless of "pre-existing conditions" so this seems to solve the predator problem. But one catch is the employer's rate (and thus the rate to the employees) is affected negatively by factors such as how much is paid out in claims. Another catch is many people can not afford to change jobs. Those who lose their jobs find it harder to find work and, prior to the UCA, impossible to find an individual insurance plan.
The authors (correctly) tell us that employer-provided medical insurance emerged as a consequence of the 1040 tax system. That alone should set off alarm bells about such insurance. Any time there's a 1040 angle, there's a door for the criminals at the Institute of Reprobates and Sociopaths to conduct crimes for their personal enrichment and/or engage in other abuses.
Did you know that the federal governments own auditor (the GAO) found that employees of this agency spend half their office time on p*rn and gambling sites rather than (mis)administering the 1040 Tax Code? Toss in the fact that they find time to engage in the Hoyt Fiasco, the Amcor Atrocity, and other famous scams, and you can see that the vast majority of Institute employees are not necessary. Massive layoffs there would be a very good thing. But it doesn't happen and now these reprobates will have unfettered access to your personal medical information thanks to the UCA. It will be interesting to see what mischief they can get by with, there.
Back to the employer-provided insurance. It was a way for employers to provide "tax-free" (free of 1040 tax, anyhow, but still ultimately subject to a myriad of taxes) compensation to employees in the form of medical insurance benefits. At first, it was basic insurance. But to make it an increasingly valuable benefit, more and more things were larded into it. Costs, naturally, skyrocketed. The obvious solution would be to end the 1040 tax system; this system produces a net loss in revenue for the federal government, and it should have been ended decades ago. Creating the UCA to address this 1040-created medical insurance cost problem is like using boiling water to clean a baby. It's just not a good solution.
But it is the solution we are stuck with, at least for now.
After reading this book, I'm not sure why any employer would continue with employer-provided medical insurance. The authors make a clear and compelling case that it's much better to go another route. And what is that route? A defined contribution program.
Note of disclosure, here. The authors are in the business of working with companies to create such programs for their employees. Specifically, that business is Zane Benefits. So there is probably some bias in the viewpoints of the authors, but I really cannot detect that in this book. I think they gave this a fair treatment. I also think their work is the perfect background, because they are subject matter experts. Because they are SMEs and work with people in this space, they are highly qualified to provide an easy to understand, step by step guide to implementation. And this is exactly what they have produced.
This book has some minor flaws (see below), but overall it is a "must read". While many people hold out hope that the Republocrats will repeal the UCA, I have learned not to expect anything from those people. The Ds and Rs differ about as much as the Crips and the Bloods or the Genovese Family versus the Gambino Family, and are in the same line of work (organized crime) except for much more money than their private sector counterparts. That means we need to know how to play the cards we're dealt in this rigged game. This book provides valuable guidance on how to play those cards.
This book consists of three Parts:
The Executive Summary is most enlightening. I can tell quite a bit of thought went into those 4.2 pages to crystallize key concepts and give the reader a good understanding from which to proceed with the rest of the book. Reading it again after reading the book is also helpful. I have a similar impression of the Introduction (3.2 pages). The body of the book runs 197.2 pages. There are two useful Appendices; A is for the consumer and B is for the employer. Readers might be taken aback at how sparse the References section is, but remember that the authors are subject matter experts. Not much academic research is really needed. If you read, say, "How to Drive a Car," by Mario Andretti, would you expect a large reference section? I think not.
Language is important and it affects how we think; this concept has been illustrated nicely by Bradbury and Orwell. For the purposes of this book, the reader can understand what's being said despite the language issues. I don't see any deliberate obfuscation. So no need to mention these gaffes at the outset, but it is important to mention them.
Has anyone ever seen a health insurance policy? Personally, I have not. What do you do, file a claim if you forget to pick up broccoli to go along with your kale and bok choy when you go shopping? Do you file a claim if your body fat percentage climbs to 8%? Just to be clear, health care consists of the lifestyle choices you make to take care of your health. Less than 10% of Americans make lifestyle choices conducive to health; you can verify this by simply observing what people put in their shopping carts at the grocery store. Very little in the way of fruits and vegetables (produce), but lots of products containing neurotoxin-contaminated corn syrup, excitotoxins, and carcinogens.
People make profoundly bad choices, because we have a disease lifestyle culture. Even our language includes such health lifestyle terms as "health nut" when clearly it is the disease choosers are are the nuts.
Because the popular lexicon misuses "health" in "health care", I think primarily due to the language abuse foisted by the medical insurance companies, when "health care" is used in a discussion of "medical care" we generally assume the speaker/writer means the latter and not the former. The goal of this book was not to provide English lessons, but to help individuals and employers deal with the disaster known as the Unaffordable Care Act (aka, Obummercare).
Another language problem in this book is the grammar. The misplaced modifiers cause the reader to have to stop and interpret the intended meaning, which is quite different from what the authors actually said. The constant misuse of "who" as an object also makes for mental pauses. I hope a future edition will have good copyediting that corrects these problems.
The major misconception with the Unaffordable Care Act is embodied in its language-abuse name. It's a tradition in CONgress to name federal programs such that the name states the opposite of the real world effects of the program. The "Affordable" in the name of this Act takes that to a whole new level.
For the typical citizen/victim of this illegal scam (the Supreme Court's ruling definitively showed it was illegal, but the decision delivered by the Court did not follow from that ruling and actually contradicted it), it's a financial negative. A good analogy is, "That's a red, eight-sided sign with the the following letters in white: S, T, O, and P. But it's not a stop sign, it means Go." Truly crazy, but it's the reality. Intimidating or buying nine people into producing something like this is not all that difficult.
Pleas note that I'm not panning medical care reform (this wasn't reform). We badly need such a thing. I am just panning just this particular scam.
On the surface the UCA does make medical insurance more affordable, and for many individuals it actually does. But when you do all the math, you find that a $1200 annual subsidy does not make up for a $10,000 annual wage loss. Ask the millions of people who lost their full-time jobs how that's working out for them now that they set their winter thermostats to 55 degrees and still can't make ends meet.
The UCA, even with its subsidies, forces many formerly insured individuals to drop their medical insurance and pay the IRS fine. After paying for food and shelter and other basic living expenses, there is only so much money left. Shelling out $200 or $300 a month for insurance just is not an option because the money just is not there. And with a $6,000 deductible, the insurance does not protect the insured from financial catastrophe anyhow.
Another issue is the fact that the Institute of Reprobates and Sociopaths is involved. Any prudent taxpayer has a separate checking account just for paying the 1040 taxes; this way, if some Institute employee launches a baseless attack (they are known for shooting first and ascertaining actual tax liability later, if at all), only the small amount in that checking acct is at risk. The Institute has to get a court order for access to other accounts, unless the taxpayer is foolish enough to volunteer that info. But now with the UCA, these criminals have access to an entirely new class of information that formerly they didn't have automatic access to. You will need a separate checking account just to pay your monthly UCA payments and that's a lot of cash withdrawals and deposits every month. It remains to be seen how manageable this is. This one factor alone prevents me from going the UCA route.
Regardless of its obvious illegality (on multiple fronts), the UCA is now something we must deal with. We can learn how to accept the crumbs that it offers in place of the loaf it takes away, and at least get something back. This book can really help.