Question on Employer health ins.

The Texas Trigger posted on Tue, Sep 25 2012 4:38 AM

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So, we all know that a huge reason for the soaring prices in healthcare in this country (and others) is due to a lack of consumer price sensitivity, resulting specifically in a consumer's ignoring the costs of care, especially with regard to cost vs marginal benefit. The reason for this lack of sensitivity seems to always be due to a payer that is separate from the consumer, be it a government or an insurance company. I have a question about employer privded health insurance specifically.

To preface, I feel like it is widely asserted on these forums that employer paid health insurance is a huge problem, and I would agree. I know why employers started paying for these plans. I know that they were simply a way for the market to get around wage ceilings that were introduced by the federal government during world war 2, and that employers needed another way to compete for the best workers besides wage rates. I also know that it didn't hurt that health plans were tax deductible.

However, it doesn't seem very libertarian to outlaw an employer from providing health insurance to attract workers if he wants, and I also doubt we would want to give up anything that is still tax deductible (We'll take it where we can get it), although I don't know if it still is (I assume it is). So, given these facts, is it predicted that if the healthcare market were totally deregulated, employers would simply stop paying for health insurance? Even if health insurance ceased to exist other than major medical policies(I suspect it would), then would the negative externalities of employer paid health insurance go away? I might have answered my own question there, but I would still like your thoughts.

Thanks