Opinion – Employer Involvement in Health Care

 

It’s an established expectation that your employer will offer health insurance. The cost, logistically, of offering it on an individual basis used to make it excessively costly for insurance companies to offer it to individuals. But with the onus of managing the benefits moved to employers, it was more affordable through work.

Now that technology makes it logistically easier to deal with individuals, sign them up and manage their benefits, there’s a lot less logic to employer-offered health benefits. Why not allow employers to just pay employees a little more and let them get their own health insurance? That’s the normal process for home, auto and most life insurance. Why should your employer be responsible for your health insurance?

True, any sensible employer wants their employees to be healthy. A healthy employee will be happier, more productive and generally a better asset to a company. It makes sense for employers to encourage that – to set up wellness programs and incentives for healthy behavior, smoking cessation and the like. But to actually be responsible for the health care, insurance and costs thereof – all of which change when an employee switches jobs, an increasingly common event in the information age – doesn’t really make sense to me. And so, the mandate for employers to offer health insurance, on top of a mandate for every taxpayer to get health insurance somehow, seems misplaced.

The common practice of employers offering health care evolved in the 1940s, when the dramatic labor shortage caused by World War II was creating extreme salary inflation. There was a federally mandated cap on salary increases – basically, if you wanted to attract or retain good employees, an employer wasn’t allowed to offer too much of a bonus or pay increase. But competition for those good employees was intense – so what else could an employer offer to sweeten the deal? That’s when benefits packages, particularly employer-supported health insurance, started to take off.

The whole practice was born as a work-around, a loophole to get past governmentally regulated wages. It became a convention because it worked as an added incentive – employees liked it, insurance was difficult to navigate or to afford on one’s own, and it used to involve the kind of negotiation that worked best when you were part of a group whose interests were collectively represented.

But none of that’s true any more – it’s equally challenging to pick a plan whether through your employer or on your own. The ACA has made costs income-dependent and individually available, so there’s no natural advantage to going through an employer. And negotiations are between employees and employers – insurers don’t adjust their plans based on bargaining with companies (or at least, aren’t supposed to).

Moving the insurance from the employer to the individual would save employers administrative expenses. The part of insurance they typically pay for could be paid directly to employees – an allowance toward whatever health plan they choose. Employers could offer health insurance if they feel it will help them close employment arrangements, but why should it be required of them? Our elected representatives have endorsed the ACA. In part, that’s a declaration that, yes, health insurance for US citizens is a collective, governmental responsibility. In making that declaration, it seems to me to imply that it’s not a direct employer responsibility. Companies pay taxes, which in turn now support various aspects of affordable care. What is the upside to mandating that they also provide health insurance, beyond the simple argument that, in recent times, they almost always have?

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