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, because the money previously spent on premiums would be included in workers’ compensation.
Insurance would stop following the job. It would follow the person.
For Democrats, the appeal is obvious: broader access to affordable coverage and a stronger individual insurance market.
For Republicans, the argument is equally straightforward: workers receive their compensation directly, individuals choose their own plans, and employers no longer act as insurance middlemen.
The policy does not expand government control of healthcare. It shifts insurance ownership to the individual.
The machinist at the kitchen table would no longer wait for an HR memo to learn what coverage he has this year. He would choose it himself, the same way he chooses a mortgage, a phone plan, or a retirement account. And if he decides to change jobs, start a business, or move across the country, his insurance would move with him.
Instead of building an entirely new health system, the country could begin by moving money that is already there—money currently routed through employers before it ever reaches the worker.