What free-market healthcare looks like in the U.S. (pros and cons)

free-market healthcare

Overview: Evaluating the disputable pros and cons of a free-market healthcare system.

free-market healthcare

Americans have been debating health care for decades, and establishing a free market in healthcare in the U.S. has been part of the debate for decades. Characterized by opaque pricing, varying levels of quality, and inefficiencies that make getting care confusing for patients and providers alike, the U.S. health care system today isn’t really a free market, but there are some pockets that operate more like one than others.

As health insurance providers, we understand firsthand the complexity of any insurance decision-making process. And whether you’re a consumer or an employer, keeping up with all the changes (federal and state laws, insurance company plans change, and ongoing conversations about what will, what was, and what currently is) could be confusing.

What is free market health care and why the debate

Free market health care is a system where there is minimal or no government regulation. With this minimal regulation, health care providers are free to provide services without needing to satisfy strict regulatory standards and requirements. As a result, health care providers do not need to comply with restrictive government licensing.

The debate usually boils down to: Which path would improve access to care and lower costs — a more centrally-planned health care system or a more free-market approach? Today we’ll be focusing on the pros and cons of the latter: a free-market approach to the healthcare system.

Related reading(s): Free Market Health Care; Does the U.S. have ‘free market’ health care?

Some pros and cons of free-market healthcare


  • Improved cost and quality of healthcare resulting from little to no government involvement

  • Flexibility to develop policies that accommodate numerous consumer preferences for healthcare financing and delivery

Improved Cost and Quality of Healthcare Resulting From Little to No Government Involvement

Some argue that to improve the cost and quality of healthcare, the government should get out of the way and let the free market reign. Thus, the biggest advantage of “free market health care” is the fact that it requires little or no government involvement.

Healthcare regulations at all levels of government can increase price, limit

choice, and stifle competition — which, in combination, lead U.S. healthcare to fail to provide its full value.

Flexibility to Develop Policies That Accommodate Numerous Consumer Preferences for Healthcare Financing and Delivery

A key goal for the healthcare marketplace is to provide effective, high-value care to all Americans. Recent health policy changes at the Federal and State levels have sought to give consumers more control over their medical expenditures so they can seek greater value for their health investment.

In Chapter 5 of the Economic Report of the President (2021), it’s argued that free-market healthcare aims to foster healthcare markets that create value for consumers through the financing and delivery of high-quality and affordable care. Government mandates can reduce competitive insurance choices and raise premiums.

By focusing on choice and competition, States are encouraged to provide flexibility to develop policies that accommodate numerous consumer preferences for healthcare financing and delivery.


  • Free-market healthcare is a concept, not a system; insurance is based upon risk pools, not competition

  • There is no evidence that giving consumers “skin in the game” prompts them to become more astute healthcare consumers

Free-market Healthcare as a Concept, Not a System; Insurance is Based Upon Risk Pools, Not Competition

According to one Family Law attorney, ““free market health care” is a concept, not a system.” In theory, by increasing competition and making the environment “friendlier” to health insurers, the cost of health insurance will decrease. The main problem with the theory of free market health insurance is the fact the insurance is based upon risk pools, not competition.

For health insurers, premiums are determined by the probability of the members in the risk pool needing health care. For health insurance companies, cost savings come from managing or manipulating the risk pool. For example, by removing people with “pre-existing conditions,” an insurer can create a healthier risk pool with fewer payouts and thereby lowering the premiums. Therefore, free market health care cannot even attempt to insure everyone.

The advantage of increasing the number of insurers in a given market is questioned by many as there are no practical examples of any significant decreases in premiums.

By comparison, it has been shown that when the health insurance industry is deregulated, the cost of insurance decreases. However, that decrease in cost comes at a price: more “loopholes” for insurers not to pay claims. It costs less because it is worth less.

Related reading(s): Many disadvantages of ‘free market’ health care

There is No Evidence That Giving Consumers “Skin in the Game” Prompts Them to Become More Astute Healthcare Consumers

Because of the structure of our healthcare system, consumers are, for the most part, unable to make informed decisions that in other markets can lead to increased competition for consumers’ spending. There are many reasons for this, including information asymmetry, healthcare not viewed as a commodity and the need for third-party payers.

You can read more about this argument in the article, “Rethinking Consumerism in Healthcare Benefit Design.”

Small Business Healthcare Tax Credit

tax credit

Health Tax Credit

It’s been said once or twice before, sometimes, great things come in small packages. And in recognition of the value of your small business, we have a word of good news for you. In the upcoming tax season, you may receive some tax alleviation for merely being small. As an owner, you can count your healthcare expenses as a business expense. So, while there are a few requirements and some restrictions, you might be looking forward to a tax break next spring, thanks to the Small Business Healthcare Tax Credit.

What is the Small Business Healthcare Tax Credit?

The Small Business Healthcare Tax Credit, included in the Affordable Care Act, benefits small employers who provide health coverage to their employees. This could be worth up to 50 percent of costs paid in employees’ premiums, or 35 percent for non-profits. With this new addition, it pays to be small and to care for your employees.

Requirements to qualify: 

Generally, the only way a small business or non-profit can claim the Small Business Healthcare Tax Credit is by enrolling in the Small Business Health Options Program (SHOP). And to qualify for this program, a business must: a
  • Have fewer than 25 full-time employees
  • Pay an average salary to the employees that is less than $51,600 per year. This does not apply to the owner’s salary.
  • Pay at least 50 percent of their employees’ health insurance premiums
  • SHOP coverage is offered to all full-time employees
    • As an employer, offering this coverage to employees who are considered part-time, is optional and not required as it is for those working full-time.
The smaller your company, the bigger the credit. And the benefit is highest for companies with fewer than ten employees paid under $25,000. There are some restrictions, however.


The 50 percent tax credit represents the maximum credit available to a business. However, this credit will be reduced under certain circumstances as some small employers might not qualify for the full amount. These circumstances are listed below:

  • The employer has more than ten full-time equivalent employees
  • The annual wages of the business’s full-time employees exceeds $25,800 in the years 2015 or later
  • The company’s health insurance premiums are higher than the average amount paid in premiums in their geographical area

It is also important to note that there are no tax credits for the owners of the business. This means that small businesses can not receive credit for insurance premiums paid on the owner’s behalf. “Owners†include owners of corporations, partners in partnerships, and sole proprietors. Additionally, there is no tax credit available to employees who own more than five percent of a C corporation and those who own more than two percent of an S corporation.

Flexible Credit: 

The tax credit can be applied forward or back to other tax years. So, let’s say a small business didn’t owe any money in taxes one year but did a year prior. That company would be able to apply their credit to their balance and still receive the benefits. Similarly, an employer could carry their credit forward in expectation of tax liabilities in the coming year.

While there are many incentives to offer health insurance to your employees, as a small business owner, you may feel financially unable to do so. That’s why this tax credit aims to assist small businesses like yours to ease such steep healthcare costs. If you are interested in offering health insurance to your employees but don’t know where to begin, reach out to an experienced health insurance professional. We at Bernardini and Donovan are here to advise each of your questions and concerns for this endeavor. Call on us today!

Hold Onto Your Health: 5 Things Men Can do to help their bodies

5 Things Men Can do to help their bodies

As we begin this June, we turn our attention to men as we look at their health. This June 6 start Men’s Health Week and what is needed to help them live healthier and happier lives. Before we get into this list, we do want to give a special shout out to women. It would be easy to look at this list as there is nothing here for you. However, nothing could be further from the truth. It is a fact that women live longer than men. This stems from the fact that women often go to the doctor, ask lots of questions, and make informed decisions when it comes to their health. As you look over this list, we ask that you would help encourage the men around you to pursue their health and help them take these steps to a healthier lifestyle.

Make that appointment even if you feel great

One of the most significant issues the men face is that they may know that they are facing health issues, but do not seek out health experts. Here is an age guide of what you should be asking about based upon your life stage:

  • For men in their 30s

    • Complete physical every two years
    • Get blood pressure checked every year
    • Cancer screenings for thyroid, testicles, lymph nodes, mouth and skin every three years
    • Cholesterol test for total LDL, HDL (the good kind) every three years
    • Testicular self-exam every month
  • For men in their 40s

    • Get blood pressure checked every year
    • Cancer screenings for thyroid, testicles, lymph nodes, mouth and skin every three years
    • Cholesterol test for total LDL, HDL (the good kind) every three years
    • Testicular self-exam every month
    • Complete physical every two years
    • Baseline prostate-specific antigen (PSA) test and digital rectal exam (DRE)
    • Stool test (for colon and rectal cancers) every year
  • For men in their 50s 

    • Get blood pressure checked every year
      • Cancer screenings for thyroid, testicles, lymph nodes, mouth and skin every three years
    • Cholesterol test for total LDL, HDL (the good kind) every three years
    • Testicular self-exam every month
    • A sigmoidoscopy or colonoscopy (for colon cancers) every three to four years or as recommended by your healthcare provider
    • PSA and DRE exam every year (https://observer.com/2015/06/men-need-to-know-more-about-their-health/)

Get Moving

One of the most significant ways to help your health is to engage in 30 minutes of cardio exercise a day. Studies have shown that it can significantly improve your heart health as well as lower your stress levels. If you are having a hard time finding 30 minutes a day, any amount of exercise is helpful. You could also use this time to engage with your family by playing a sport together or going on a walk together.

elder health insurance

Stop Smoking

This single step has one of the greatest benefits to your health. When you smoke, you are in taking over 4,000 harmful chemicals that are known to cause cancer in your body. By quitting smoking, you are giving your lungs a chance they need to heal and to function correctly. The health of your lungs goes up significantly in just two weeks after you stop smoking.

Hormone changes are not only for women

While many are familiar with menopause for women, men also have changes to their hormones while they age. Testosterone levels tend to drop as men age. If you want to get an idea of where your levels are at, it is good to test them in the morning before 9 am. That will give you a good idea if your levels or high or low. If you start to gain weight, especially around your middle, this can change your testosterone levels as well. Keeping a trim waist helps keep your levels healthy.

Mental Health Matters

In many ways, your attitude about aging and your mental health has just as much effect on you as your physical condition. Pay attention if you are utilizing any unhealthy coping mechanisms or substances to help you get through a day or to deal with stress. If you find yourself in a negative place, please reach out for help. There are more options available to help men find the right work/life balance and be happier each day.

Healthcare In the News – August Edition

Healthcare in the News

Healthcare In the News – August Edition

In the past month, we have seen some seriously dramatic news stories about our nation’s health care laws. Usually, dramas of that sort are kept to cable television, but maybe art does imitate life, especially as we watched the news coverage of the US Senate. If you have been living under a rock or just don’t enjoy listening to the news, let us give you a quick fly over.

In May, the House voted to pass the ACHA which had a series of changes to our current Affordable Care Act. The Senate then decided to write their bill however they delayed the voting until they could work out their details within the Republican party. It failed to pass. Then a series of votes continued to try and repeal and possibly replace Obamacare. None of those passed either. The Republican party needed every representative to vote yes, and with some dramatic conversations between party members, the numbers didn’t rally.

When Senate Majority Leader Mitch McConnell was asked about the future of healthcare reform, he stated that they had suffered a setback and that the future was “murky.” This murkiness has started talks with Democrats about single payer healthcare. If you are unclear about what single payer healthcare is, you can read about it on our previous blogs: www.bdhealthinsurance.com/single-payer-healthcare and how it doesn’t work here: www.bdhealthinsurance.com/single-payer-healthcare-cons-part-one and here: www.bdhealthinsurance.com/single-payer-healthcare-cons. Representative John Conyer (D- Mich) has already introduced his single payer bill called Medicare for All. He already has the support of about half of the House Democrats behind his bill. Senator Bernie Sanders says he will propose his bill shortly. It will probably look very similar to the plan he posted on his website last year, and we heard him speak about on the campaign trail. We will have to wait and see how this unfolds in the next few months.

Does Your Business Qualify For SHOP Tax Credits?

Did you know that as a small business owner with fewer than 25 employees you may be eligible to receive a tax credit? This is only of course if you qualify to offer your employees health coverage through the Small Business Health Options Program, also known as SHOP.

The Small Business Health Care Tax Credit is typically awarded to small businesses whose full time employees make an average of $50,000 or less annually. In order to qualify, you must be willing to pay at least 50% of the premium costs of your full time employee’s health care. You will not be required to offer health coverage to your part time employees or to the dependents of your full time employees. If you have fewer than 10 employees, expect to receive the ultimate benefits. The smaller your business, the larger tax credit you can expect to receive.

Employers abiding by the SHOP qualifications can receive up to 50% of their contribution towards employees’ premium costs. As a tax-exempt employer, you can receive up to 35 percent of your contribution towards employees’ premium costs in tax credits. Remember, this tax credit is only available for those employers who have provided their employees’ health coverage through the SHOP Marketplace.

How to Qualify for the Benefits of the Small Business Health Tax Credit:

  • You must have 50 or fewer full time employees in order to offer health coverage through the SHOP Marketplace.
  • As a SHOP member, you must offer health coverage to each full time employee.
  • In order to qualify, about 70% of your employees must enroll in your SHOP plan.
  • You will need to be relatively close to a SHOP service area in order to take advantage of this program.

Bernardini & Donovan Insurance Services strives to provide Redlands, California residents with excellent insurance services custom tailored to meet your unique needs. Contact us today and allow us customize a unique health insurance package for your family based on your needs.


SHOP: How It Can Benefit Your Small Business

With all the confusion surrounding the implications of the Affordable Care Act, it is imperative that you utilize all the available options as a business owner. The Small Business Health Options Program has been put in place to guide small businesses through the process of offering health coverage to their employees.

As a small business owner with 50 or fewer full-time employees, you are given the opportunity to take advantage of the Small Business Health Options Program Marketplace, also known as SHOP. If you are a small business owner with less than 25 employees, you may be eligible to receive tax credits when purchasing health coverage for your employees through the Small Business Health Options Program.

Benefits of The Small Business Health Options Program, Include:

  • You are in control of what coverage you offer your employees and how much you pay toward employee premiums.
  • Your business’ needs and your employees’ needs can be met by choosing between 4 different levels of coverage.
  • You can choose to begin coverage at any time. As long as you enroll by the 15th of the month, coverage will begin on the 1st of the following month.
  • As previously mentioned, as a small business with fewer than 25 employees, you may be eligible to receive a tax credit.

Qualifying Terms for The Small Business Health Options Program, Include:

  • Any business with 50 or less full time employees may be qualified to offer employees coverage through SHOP.
  • If you are interested in using SHOP, you must offer coverage to every single one of your full time employees.
  • If you are looking to use SHOP, you may be required to have a large majority your employees enroll in your SHOP plan. This percentage is typically around 70 percent.
  • You must be within the boundaries of a SHOP service area to utilize the service.

Bernardini & Donovan Insurance Services strives to provide Redlands, California residents with excellent insurance services custom tailored to meet your unique needs. Contact us today and allow us customize a unique health insurance package for your family based on your needs.

What Every Small Business Owner Needs to Know about the Affordable Care Act in 2014

New policies related to healthcare have many small business owners concerned of what is to come in 2014. News reports are tossing around penalty figures of $2000 per person per year. And that is just the start of the penalty scale. Bernardini & Donovan Insurance Services explains what a small business owner needs to know about his or her responsibilities under the Affordable Care Act:

  • Small businesses won’t be penalized. Businesses that employ less than 50 full-time employees will not be held to the employer responsibilities outlined in the Affordable Care Act.
  • However, you can qualify for a tax credit. A small business that pays average yearly wages of less than $50K, has less than 25 full-time employees and offers affordable health insurance could receive incentives in the form of a small business tax credit. Beginning in 2014, this credit could be up to 50 percent and will help offset group health insurance costs.
  • You may have more buying power than you think. According to HealthCare.gov, the average small business pays  18 percent more for group health insurance than a larger company would. Small businesses that employ less than 100 people on average will have access to the Health Insurance Marketplace, reducing costs by giving access to plans seen by larger corporation.

Contact Bernardini & Donovan Insurance Services at 877-251-2447 today for more information on group health insurance for small businesses.

Employer Responsibilities Under the Affordable Care Act

Beginning in 2014, employers may face large penalties if affordable health insurance is not offered to employees. Bernardini & Donovan Insurance Services helps you determine your responsibilities as an employer under the Affordable Care Act.

Which type of group healthcare is considered affordable under terms of the Act?

Affordable care means that less than 9.5 percent of the employee’s gross income goes toward health insurance premium. Additionally, the employer must pay at least 60 percent of the policy premium.

I have a small business; will I face fines if I don’t offer affordable healthcare coverage?

If you have less than 50 full-time employees, you will not have to pay penalties.

I have a company with 50 or more employees, what happens if I don’t offer affordable coverage?

If your company with 50+ employees does not offer affordable coverage, you will face penalties that begin at $2000 multiplied by the total number of employees, minus 30.

Companies that offer group healthcare plans conforming to the terms of affordability under the Act will not face any fines, according to information provided by the Henry J. Kaiser Family Foundation.

Please contact Bernardini & Donovan Insurance Services at 877-251-2447 for more information about how the Affordable Care Act will affect businesses in  Redlands, CA ,and throughout California.

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