This raises the most important objection. What happens when someone leaves a company offering excellent insurance and moves to one that has traditionally offered terrible coverage?
Portability can’t require every new employer to reproduce every unusually generous benefit provided by the old one. A worker leaving a company that contributes $22,000 toward a nearly deductible-free family policy couldn’t demand that every future employer match it indefinitely. That richer benefit was part of the old company’s compensation package.
But a worker also shouldn’t arrive at a new job and discover that “health insurance” means a giant deductible, a narrow network and a benefit that becomes useful only after the family has spent thousands of dollars.
The answer is a national coverage benchmark. Every employer would have to offer—or contribute enough to purchase—coverage at least equal to that standard. Companies could provide broader networks, lower deductibles and better drug coverage, and many would use those benefits to attract employees. But they couldn’t provide something substantially worse and still call it meaningful insurance.
Disclosure alone would not be enough. A worker may understand perfectly well that a plan is inadequate and still have no realistic alternative if every available job in the area offers the same inadequate coverage.
The benchmark would measure more than whether a policy technically exists. Current federal rules generally consider an employer plan to provide “minimum value” if it pays at least 60 percent of the expected cost of covered services and includes substantial physician and hospital coverage.⁶ That is too low a floor for a system intended to provide genuine security.
A credible standard would specify the essential services covered, the percentage of expected medical costs paid, limits on deductibles and out-of-pocket expenses, prescription-drug protection and a usable network of doctors and hospitals. It would also establish affordability standards for family coverage, preventing companies from offering inexpensive insurance to an employee while making coverage for a spouse and children prohibitively expensive.
A company could meet the standard in three ways: offer its own qualifying plan, contribute toward a qualified private plan selected by the employee, or pay the required amount into a public option.
That creates a floor, not a ceiling. A worker changing jobs might leave behind unusually generous benefits, but would no longer face the possibility of falling from excellent coverage to insurance in name only.
Critics will also worry about adverse selection: healthier people choosing inexpensive private plans while people with serious medical needs cluster in the public option and drive up its cost. That danger is real if insurers are allowed to compete mainly by attracting healthy customers. Every qualified plan would therefore have to accept applicants without regard to health, cover the same core categories of care and participate in a national risk-adjustment system. Plans enrolling people with greater medical needs would receive larger payments, while plans attracting healthier populations would pay into the pool. The Affordable Care Act already uses risk adjustment in the individual and small-group markets, and the public option should be open to everyone rather than becoming a refuge only for people who are older or sicker.
Employers will say the proposal raises costs. For companies now offering inadequate coverage, it would—and that is partly the point. We don’t allow employers to satisfy wage laws with compensation that has little value. We shouldn’t allow a large corporation to satisfy a health-benefit obligation with a policy its workers can’t afford to use.
Small businesses are different. Imposing the full cost of a national plan on a neighborhood restaurant with six employees could force lower wages, fewer hours or lost jobs. Large employers should be required to finance the full benchmark. Smaller companies should make contributions scaled to payroll, with federal tax credits or direct assistance filling part of the gap. Very small employers could transmit their contribution through the payroll system rather than administer insurance themselves, and workers with several part-time jobs should be able to combine contributions.
Employers should also disclose the health contribution as plainly as they disclose salary and retirement benefits.