Why is it that employers must provide/subsidize healthcare?

[kurt_cagle]

26. A Culture of Corporate Dependency

The mindset of corporations is to leave no profitable niche untapped, and to create dependencies where none existed before. In the aftermath of World War II, there was a labor shortage as pent up demand caused unemployment to reach its lowest point in history. The jobs involved were generally labor intensive, and many companies employed doctors on staff to handle the frequent injuries such labor entailed. However, doctors are expensive, and they too were in high demand, so many companies began to offer a stipend to cover doctor visits as doctors either went into private practice or started working for the mega-hospitals that also emerged after WWII.

As health care costs began to rise, it made sense to pool funds, since in general disease and injury costs were comparatively rare on an individual basis - the number of people who were sick or injured at any given time was sufficiently low that companies investing into the pool would only tap it when injury did occur, which meant that over time, you ended up developing a tidy profit. What's more, the people being covered were generally men and (a few) women in their prime of life - mid twenties to early sixties, were reasonably affluent, and were usually in good health.

Such pools naturally attracted speculative investors, who realized that if they had control over these buckets of money, they could invest it in other areas. So they bought out the company pools and established themselves as insurance companies, and then began expanding that pool to cover higher and higher risk people via higher deductibles, as well as investing outside of the health care domain entirely.

That's when things began to go south. More than a few insurance companies wracked up losses in other areas through bad bets, and they rose rates to compensate. Health care providers invested in new technology, which had to be amortized, and the pharmaceutical industry, seeing an increasingly captive market, expanded their own R&D while at the same time taking larger amounts off the top for administrative purposes, as did the insurance companies themselves. In the 1970s there was an attempt to reform the industry with Health Maintenance Organizations, but these eventually went from a gateway to being a facilitator of the health care complex. Demographics caused problems as well, as their core pool aged and placed higher and higher demands upon the system. In essence, the health insurance industry ended up building on a Ponzi scheme that sustained itself for about fifty years, but is reaching a point where the number of new investors into the scheme cannot cover the accumulated debt and bad investments of all previous investors.

Today, the system is collapsing, and like so much else that the private enterprise system has created, it has left the mess to be picked up by the taxpayers. Yet the insurance companies don't want to lose the pots of money they have - they simply want the government to pick up those people that are a net loss for them. Since many of those same insurance companies are now partially or totally owned subsidiaries of the giant investment banks, those banks are also vehemently opposed to reform. The pharmaceutical and medical supply companies are generally opposed, since much of the cost of drugs and the like are in effect hidden by what the insurance company does cover, as are costly procedures performed by the hospitals.

I'm not sure where things will end up. My suspicion is that in the end, ObamaCare will end up as the two tier system it is today - individuals will either buy directly into the government pool or into a private insurance pool. Employers will get out of the insurance business altogether.