It still assumes a world where the employer sits at the center of everything—even though the worker is paying the bill.
Today roughly half of Americans receive health insurance through an employer. Older Americans rely on Medicare, while lower-income households depend on Medicaid. Everyone else navigates the uneasy boundary between employer coverage and the individual insurance market.³
That structure shapes everyday economic decisions in ways that often remain invisible. Workers stay in jobs they might otherwise leave because they cannot risk losing coverage. Entrepreneurs postpone starting businesses because insurance disappears the moment they resign. Freelancers and employees of small companies often pay far more for the same policies offered through large corporations.
The Affordable Care Act tried to build an escape hatch by creating marketplaces where individuals could buy insurance directly. Millions of Americans now do.⁴
But the marketplace was designed as a backup system rather than the primary one. Employer coverage still dominates the landscape, which means the basic structure of the system remains unchanged.
And that leads to a strange political reality.
Some Republican proposals have suggested replacing employer-based insurance with a direct credit or check that individuals could use to purchase their own coverage. Democrats usually dismiss the idea immediately, arguing that the credits would be too small and that people would end up underinsured.
In many versions of the proposal, that criticism is correct. If the credits are too small, millions of people would indeed struggle to buy adequate coverage.
But the problem is not the idea of giving people control over their insurance.
The problem is where the money comes from.
Because the United States is already spending enormous amounts subsidizing employer health insurance. The money exists. It is simply hidden inside the system.
Every year the federal government gives up roughly $296 billion in tax revenue because employer-sponsored health insurance is exempt from income taxes.⁵ The subsidy does not appear as a payment. It lives quietly inside the tax code, invisible to most workers.
Yet it is one of the largest health-related subsidies in the federal budget.
The country is already spending the money. We are simply sending it to employers instead of to the people earning it. Imagine shifting that structure.
Medicare would remain unchanged. Medicaid would remain unchanged. For everyone else, the ACA marketplace could gradually become the primary place to purchase insurance.
Employers would phase out health plans and instead pay higher wages,