In several ways, traditional health care financing has long been unfair to middle- and lower-income insureds. A major problem is monopoly pricing of many services and goods. Although the point is seldom recognized, American-style health insurance greatly aggravates the redistributive effects of monopoly by weakening the usual constraints on sellers' pricing freedom. Moreover, lucrative monopoly is often tolerated as an expedient instrument of public finance through which seemingly desirable spending on health care or health-related innovation is financed by the equivalent of an unfair head tax on individuals with private coverage. Other underappreciated unfairnesses are specific to employer-sponsored health coverage and to the distorted incentives and perceptions spawned by the tax subsidy encouraging it. Because employer-sponsored coverage effectively hides premium costs from the employee-voters who ultimately bear them, middle- and lower-income employees regularly bear the unjustifiably high and uncontrolled costs of health coverage designed principally to accommodate the values and economic interests of the health care industry and other elites. These same consumers also appear to get less, as a group, out of their employers' health plans than their higher-income coworkers, despite bearing equivalent premium costs. The Patient Protection and Affordable Care Act does little to alter the framework of employer-sponsored coverage and thus represents a missed opportunity to rectify its unfairness to the working class. Although the law's main purpose is to ensure that nearly all individuals either have employer coverage or procure "essential health benefits" through an Exchange, it defines the latter new entitlement in such a way as to perpetuate, not correct, the distortions engendered by the tax subsidy. In addition, the new law not only has no answer for the provider monopoly problem but is likely to increase wealth transfers from consumers to providers. [ABSTRACT FROM AUTHOR]



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