Job Lock and Victor Fuchs – American Healthcare Chronicles

Two questions have run through this series without a clean answer. The first appeared in Edition 1: what happens when you leave your job? The employer-based system was built for a world where people stayed at companies for life. Nobody asked what happened when they didn’t. The second appeared in Edition 5: what happens when costs have no ceiling? Medicare passed with no price controls — physicians and insurers set their own fees, and the federal government paid whatever was charged. By the 1990s, both questions were arriving as lived reality for millions of Americans. As healthcare costs rose through the 1980s and 1990s — driven partly by uncapped Medicare incentives, partly by the tax exclusion that rewarded ever-richer benefit packages — employer insurance became more valuable. And more dangerous to lose. Each stakeholder was responding rationally to their own incentives. Insurers, operating in a market where pre-existing conditions could be excluded, charged more for individual…