If You Work For A Company, Your Health Care Is Part Of Your Pay
McArdle blogs at The Atlantic about how health benefits play out:
The problem is that people don't feel richer. In part that's because the costs are hidden--employers rarely tell you how much health care you're being "paid" with--and in part it's because almost all of our health care compensation consists of embedded options, rather than direct consumption. When we develop a new way to treat very premature babies which costs $1 million and shepherds 10% more babies to viability, we all have to pay for it. And probably we'd all like to know that if we had a very premature baby, it would have a better shot at living. But most of us don't have very premature babies, and those who do, don't really connect that event with a 1% increase in their insurance premiums 10 years ago.Austin Frakt wonders what would happen if people realized how much of their wages were diverted into health care spending.
...This is an important challenge for health care reformers on both left and right: even when given a direct choice, people seem to want a system that closely resembles the expensive and inefficient one we have; their main policy goal is simply to shift the bill onto someone else. Obviously, this is not a feasible solution at the national level.
At my previous employer, we got yearly statements about the state of the health care plan, with per-employee contributions and payouts, and the overall financial state of the plan. (They were self-insured.)
"even when given a direct choice, people seem to want a system that closely resembles the expensive and inefficient one we have..."
That is interesting, considering that nearly everyone complains about the coverage they have, and how much premiums have gone up over the years. I'm not sure what the answer is. I wonder if the problem is just that everyone's been dealing with the employer-provided system for so long that they can't imagine how anything else would work. I'll bet a lot of people have nightmares about having to deal with the byzantine hospital and doctor billing systems themselves.
Cousin Dave at October 9, 2011 8:37 AM
"Obviously, this is not a feasible solution at the national level."
But it controls people - the goal of those in charge today.
This makes your choices yours.
If you don't pay, you're not the customer. You're the commodity.
Sick? The clerk is not sick. Fill out this form. You're not being denied care - it just isn't available yet. Fill out the form.
Radwaste at October 9, 2011 9:01 AM
And here in CA, freelancers and the self-employed have a very limited selection of insurance companies to choose from, which is insane.
KateC at October 9, 2011 11:15 AM
Company Paid Health Insurance is Part of Your Salary
Many people misunderstand who pays for health insurance. It is convenient to think that "good" employers provide health insurance, but "mean and stingy" employers leave their employees to scrounge for themselves. They complain that everything would be fine if we forced all employers to be "good".
This is part of the myth that we can increase prosperity by raising the minimum wage. We (supposedly) just have to force the "mean" employers to become "good" and pay more.
In reality, an employee's health insurance and all other benefits are part of his earnings, part of the payment he gets for doing his job. The tax law encourages an employee to receive some of his earnings in tax-free health insurance outside of his paystub, with all other earnings reported on his paystub. It is all payment to the employee, from the view of the employer.
An employee with low productivity can't afford expensive health insurance, and this is true regardless of who writes the check, he or his employer. If we force employers to provide more insurance, there are two possible outcomes: The employee's cash wage goes down; or the employee is fired or not hired. If enough employees must be fired, then the company goes out of business.
People are already personally paying for their "employer-paid" insurance. They don't buy it directly so (1) it doesn't attach to them when they change jobs, (2) and they can't shop for the insurance they might want. The employer writes the check with part of the money earned by the employee.
Untangle the tax mess, remove employers from the middle, and salaries would go up in the amount of the "free" healthcare benefit through employers. Then most people would have enough take-home pay to buy their own health insurance. Doctor's and insurance companies would compete for their business, pressing prices down. That is what healthcare reform should be about, along with removing anti-competitive rules and interest group mandates from the insurance market.
- -
Why are health insurance rates going up faster than inflation? An analogy.
Health Insurance Thirst Mandate
( easyopinions.blogspot.com/2010/11/health-insurance-thirst-mandate.html )
Andrew_M_Garland at October 9, 2011 2:07 PM
Then the politicians mandate expensive things be covered. New York does it, so I pay for coverage I don't need.
MarkD at October 9, 2011 10:40 PM
"Obviously, this is not a feasible solution at the national level."
Except, of course, that it is. Every other industrialized democracy pays for health care out of taxes at a national level, and every one of these systems costs much less (about 50% per capita less on average) than what we are paying in the US.
The rising cost of health insurance (which in the US is typically tied to employment) has dramatically raised the cost of hiring new employees for companies that provide health insurance. These rising premiums have contributed the stagnant wages many employees have had for the past few decades. In many cases, the total compensation cost to the employer is going up and up while the portion paid to the employee has only been tracking inflation.
Factual Interjection at October 10, 2011 12:27 PM
Leave a comment