Government caused the pre-existing condition problem

In this post I explained why I think the tax advantage to employer-provided health insurance, over individually purchases health insurance, is the government-induced cause of the pre-existing condition problem that most folks prefer to solve by introducing even more government, rather than addressing the root cause.

In John Cochrane’s health care essay, he agrees.

Before ACA, the elephant in the room was the tax deduction and regulatory pressure for employer‐based group plans. This distortion killed the long‐term individual market and thus directly caused the pre‐existing conditions mess.  Anyone who might get a job in the future will not buy long‐term insurance. Mandated coverage, tax deductibility of regular expenses if cloaked as “insurance,” prohibition of full rating, barriers to insurance across state lines – why buy long term insurance if you might move? – and a string of other regulations did the rest.


2 thoughts on “Government caused the pre-existing condition problem

  1. Government has cause ALL of the true problems having to do with how we pay for health care.

    As Seth and Mr. Cochrane have pointed out, the changes in the federal tax laws that favored employer sponsored insurance made changing (or losing) jobs truly catastrophic if one developed a medical condition while working for employer A and essentially made the employee dependent on employer A.

    The other significant complaint about medical care concerns its high cost. While some of this no doubt stems from the fact that the today’s treatments for illnesses or injuries are significantly more effective, both in terms of outcome and faster recovery, the overwhelming cause of he rapid rise in prices is due to (a) federal rules and subsidies which created a situation where “someone else” was paying the provider for John Doe’s treatments thus eliminating John Doe’s incentive to shop for a better price, and (b)cost shifting – from Medicare and Medicaid beneficiaries to private insurance patients – due to mandated price controls on federal programs (which were enacted to combat the rise in prices caused by the federal government’s meddling in the first place!).

    The history of the federal government’s involvement in health care has been a series of “solutions” intended to fix the problems created by the federal government’s previous solutions to some real or perceived problem.

  2. Pingback: My recommended health care reforms | Our Dinner Table


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