Why Don’t Big Firms Fire the Sick?
19th January 2011
Bryan Caplan looks underneath the covers.
My friend in the insurance industry once let me in on a little secret: De facto, though not de jure, virtually every big firm is also a health insurance company with an exclusive clientele: Its own labor force. Once a firm is big enough, orthodox “health insurance companies” just charge the firm a fee equal to all its employees’ health care costs plus a handling fee. Big firms aren’t buying insurance from insurance companies; they’re subcontracting their paperwork.