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Extras: Michael Cannon on Employer-Sponsored Health Care

September 18, 2022


Why do millions of American let their bosses control their health insurance?  Juliette Sellgren has practical and concerned questions. Michael Cannon ("the most famous libertarian healthcare scholar") has answers and ideas for improvements. 
By Christy Lynn

Institutions shape the experiences of people living in them. The power of regulations, norms, and unquestioned assumptions are especially dangerous when they have been around so long and are so entrenched that people cannot even imagine a different way of doing things or see a path to a change. Great Antidote host Juliette Sellgren and guest Michael Cannon spend almost an hour talking about how the US policies regarding employer-sponsored health insurance.

You can listen to the podcast here. 
Cannon opens big with three responses to Sellgren's signature open about what young people today should know. He talks about realizing expertise has limits, individuals are often worth more than they think they are (especially women!) and that it’s important to not take professional rejection personally. Then they jump into the very complicated world of government regulations on US health insurance markets.

Key Quote (lightly edited)
[H]ealthcare is there to make sick people well again, to mend broken bones and other injuries, and to improve and to lengthen the quality of our lives. In order to do that, there first has to be something called medicine. You have to have the treatments that will alleviate or cure illness that will repair injuries. And so when you're thinking about health policy, one of the first things you wanna make sure of is that you have in place the conditions that will allow people to come up with new medical treatments.
 
One example is there's a disease called hepatitis C. It's a really nasty disease. It's often fatal. And a few years ago, someone came up with a drug called Aldi that cures hepatitis C 97% of the time, just cures it. Before there was no cure, this awful chronic illness with some treatments for it, but people would have to live with it for the rest of their lives. This is a cure. We want the conditions to be in place that will allow people to produce medicine that will discover and develop new treatments. That's number one. 

Number two: we want to make sure that this stuff works. And I don't just mean that the pill does what the manufacturer says that it will do. We want to make sure that we're promoting all dimensions of healthcare quality, which is yes, the pill works, or this doctor knows how to set a bone, or, when you get, when you go into a hospital for treatment, we want to make sure that the hot hospital helps you rather than kills you, because there's a lot of very dangerous things that can happen in a hospital… 

So you want to make sure there is something called medicine. You want to make sure that it works, and then you want to make sure that as many people can get it as possible, hopefully everybody. The most important thing there is you want to make sure the conditions are in place that will drive down the prices for all sorts of medical tests,  and treatments, and so forth. Because when you have falling prices in healthcare, that's the most important thing you could do to bring healthcare within the reach of more and more people, to bring healthcare within the reach of people today, who couldn't afford it yesterday…
Health insurance is what helps you afford the things that you couldn't do, the medical care you could not otherwise afford. And if the conditions are in place to drive down healthcare prices, then that helps to make health insurance not only more affordable, but less necessary, because more people can afford the medical care that they need out of pocket. So, broadly speaking, those are the things that you're looking to do in healthcare. 
Cannon and Sellgren talk about things that a lot of young people experience, questions about being on parents’ insurance, why some prescription costs seem so low and others seem so high, and what sorts of people might forgo health insurance from an employer or all together. Sellgren points out how much these policies giving preference to getting health insurance through employers harm people who jump from job to job or make money from a variety of freelance work. 
They also discuss the history of when and why employer sponsored health care began in the US and how attempts to change how it works have succeeded and failed over time. One point that Cannon returns to is how easy it is to forget that the money employers spend on health insurance is the employees' money. If employers weren’t paying for insurance they would offer high compensation. Employees would control that compensation but the current regulations take this purchasing power away from individuals and give it to employers. And in the US this amounts to manipulation of trillions of dollars. 
Around 41:52 Sellgren talks about her own experience with using insurance to buy prescription allergy medication and around 50:51 Cannon talks about an (very successful!) experiment to bring down costs on knee replacements. 

Key Quote (lightly edited)
Most important thing we can do to bring healthcare within the reach of more people in the United States to make healthcare more universal is to take the trillion dollars of workers' earnings that employers are spending on employee health benefits and return that trillion dollars to the workers who earned it. It's part of their earnings, their money. We should let them control it. And when they do control it, we should give them the freedom to spend that money how they want on the health plans that they want and the providers that they want. And when we do that, they will drive down prices in the health sector and demand higher quality insurance and medical care at the same time. These are the most important things that we can do to make healthcare more universal. Every, every penny you can drive down healthcare prices makes it easier for people on the margins to afford healthcare and health insurance. And it makes it easier for the rest of us to, to help those who still cannot help themselves. And there are a number of ways that we could return that trillion dollars to the workers who earned it. All of them, some are more complicated than others, so more politically feasible than others, but all of them, because they would return that trillion dollars to workers would constitute the largest effects of tax cut in memory larger than the Reagan tax cuts of 1981, which are the largest tax cuts that most people alive have ever seen and it could do so without blowing a hole in the federal deficit, it would just give workers control over money that a tax code is now letting their employers control.
Cannon closes by talking about some things he’s changed his mind about and the list is long! Religious beliefs, political beliefs, support for specific policies changing as he learned more. 


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