Some thirty states are considering bills that would require employers to pay for at least part of the health coverage for the uninsured. There is, of course, more here than meets the eye.
First, there is a tendency in the media (and among those in the professions) to conflate “health care” and “health insurance.” This is demonstrably inaccurate: those without health insurance rarely go without health care, unless they deliberately choose to forego it.
Second, we constantly hear about “tax breaks for business,” and “employer paid health insurance.”
Neither of these things actually exist:
Businesses do not pay taxes, they collect them. And businesses do not pay for health insurance, they simply re-route dollars from employees’ wages to health insurance carriers.
The regulations under discussion here tend to fall into three broad categories:
1) Mandating employers to provide health care to workers or pay into a state fund to help the uninsured
2) Requiring that employers doing business with the state provide health insurance
3) Requiring enrollees in state public assistance programs to list their employers, thus embarrassing companies into paying better benefits.
Let’s take these one at a time: First, mandating employers to provide health care -- in essence, forcing more dollars away from employees and into insurance company coffers – is a surefire way to increase unemployment. And this does nothing to help provide health coverage to those who are self-employed, or work part-time jobs.
Second, how many companies actually do business directly with the government? A percentage, to be sure, but a minority nonetheless. How will this help to decrease the ranks of the uninsured?
The last one is just funny: how does one “embarrass” a corporate entity? Perhaps ABC Widgets can borrow Data’s “emotion chip,” and learn to blush.
But I doubt it.
The basic point here is this: companies do not pay for insurance; they redirect wages. Legislation which does not reflect this reality is doomed to failure.
My personal opinion is that employers should provide as many health benefits as possible . . . in lieu of higher wages. The tax breaks to the employer (and employee) are considerable.
ReplyDeleteTo the employer, health insurance premiums avoid matching FICA taxes which saves almost 8% on every dollar paid compared to paying the same amount in wages. Health insurance premiums are not subject to Workers Comp, FUTA or SUTA which further saves money. And just like wages, employer paid health insurance premiums are tax deductible.
The employee gets a benefit that is free of (state & federal)income & FICA taxes. That means that $100 in wages is equal to take home pay of $75 - $80 for most employees. But $100 in health insurance premiums paid is roughly equal to $130 in before tax wages.
But requiring employers to provide health insurance is counter-productive if the idea is to grow your economy. Of course the trade-off is, workers who do not have company health plans may opt to forego coverage entirely which creates an entirely different financial problem that must be dealt with by society.
We have too much government interference already in business, and even more so in the health insurance arena. What we need is less government mandates and more free market choices.