Thought Experiment
Definitions
Scenario 1: Current State
Workers requiring health insurance are restricted to the smaller opportunity set, EOh (smaller than EO).
Scenario 2: Alternative State
Assumption:
Take the current per-person annual health care cost under private insurance, let’s call it $10k per year. Assume a new national policy de-couples health insurance from specific employment opportunity but everyone still pays the same $10k regardless of “eo”.
Implication:
Workers requiring health insurance may now select “eo’s” from the larger set, EO.
By basic math, the larger set is likely to have a better “eo” than the smaller set, Eh, for any given worker (would you rather have 100 job opportunities or 130?)
By assumption, per person health costs are the same in the two scenarios. (but in a dynamic world, these costs could adjust, perhaps downward because workers now have more economic choices.)
Therefore, we can achieve better economic outcomes, and higher GDP, even by still assuming today’s existing private employer health costs by de-coupling health care from specific “eo’s”.
This would have the potential to reduce the percent of GDP allocated to healthcare in the US - without even attacking health costs directly - but by merely increasing the opportunity set.
More opportunities leads to better economic outcomes.
Land of opportunity.