of private insurance, but one of the principal factors is how much it costs to
offer consumers a wide range of choices.75 If there were good evidence that
allowing such a range of choice paid off in terms of better competition,
greater consumer satisfaction, etc., the higher cost would be worth it; but
such evidence is lacking, so the American public’s addiction to free choice
must be seriously questioned.
B. Does EBHI Assure Choice?
Critics of the ACA, and of government intervention in the healthcare
sector generally, emphasize the benefits of choice and complain about how
the law limits free choice; but EBHI does not assure—or even support—
consumer choice to the extent that many assume. In the pre-ACA world,
employers were free to choose what health coverage, if any, to provide their
employees. Some companies used that freedom of choice knowledgeably
and benevolently for the employees’ welfare; but choice at the corporate
level does not equate to choice at the level of the individual employee.
While some employers, especially larger ones, may offer their employees a
range of health benefit options—often termed a “cafeteria plan”—others
make a company-wide selection of a single health plan and the employees’
only “choice” is to take or leave it. The chosen plan may be ideal for some
of the company’s employees and not so good for others;76 thus, the systemic
choice offered by EBHI on the macro (healthcare system or company/firm)
level may be a mere illusion of choice on the micro (individual insured)
Moreover, EBHI may interfere with job choice in the labor market. The
variability in health plans from one employer to another makes it difficult to
Abuse of the Medical Loss Ratio to Measure Health Plan Performance, 16(4) HEALTH
AFFAIRS 176-187 (July-Aug. 1997), available at http://content.healthaffairs.org/content/
75. To explain just one dimension of this, consider the marketing costs involved when
an employer seeks or accepts bids from several insurance companies. Each company must
employ salespeople to market its product(s) to the employer. The sales costs necessarily add
to the price of the insurance. If the employer offers several different insurers’ policies, each
insurer must also sell at the individual employee level, with the costs of brochures, websites,
call-center operators, etc., again adding to the price of the coverage. At the corporate level,
the insurer’s activity is termed “marketing”; at the individual level it is called “enrollment.”
Both levels of activity generate significant cost, which raises the price of the product.
76. A company that offers a very generous health insurance, for example, may be
serving well the interests of its middle-aged, high-tax-bracket managerial class who like and
can afford “gold” coverage, while a healthy young assembly-line employee might find that
level of coverage to be overkill. He or she might be better served by a less expensive, less
generous “bronze” level plan and more dollars in the pay envelope. Yet, if the company
follows a “one size fits all” health benefits policy, the “choice” that the employer enjoys at
the corporate level is no choice at all for the young employee.