Friday, May 25, 2018
Opinion

Column: The illogic of employer-sponsored health insurance

Imagine yourself in a bar where a pickpocket takes money out of your wallet and with it buys you a glass of chardonnay. Although you would have preferred a pinot noir, you decide not to look that gift horse in the mouth and thank the stranger profusely for the kindness, assuming he paid for it. You might feel differently, of course, if you knew that you actually had paid for it yourself.

Persuaded by both theory and empirical research, most economists believe that employer-based health insurance is an analogue of this bar scene.

The argument is that the premiums ostensibly paid by employers to buy health insurance coverage for their employees are actually part of the employee's total pay package — the price of labor, in economic parlance — and that the cost of that fringe benefit is recovered from employees through commensurate reductions in take-home pay.

Evidently the majority of Supreme Court justices who ruled in Burwell vs. Hobby Lobby case do not buy the economists' theory. These justices seem to believe that the owners of "closely held" business firms buy health insurance for their employees out of the kindness of their hearts and with the owners' money. On that belief, they accord these owners the right to impose some of their personal preferences — in this case their religious beliefs — on their employee's health insurance.

Score it 1-0 in "Supremes vs. Economists."

In the ruling, the owner of Hobby Lobby, a chain of craft stores, gained the right not to include certain contraceptive goods and services in the insurance bought for employees, because use of these services conflicts with the owner's Christian beliefs. Although the justices argue that their ruling is narrowly confined to contraceptive services, one must wonder what other items other business owners in the future may seek to jettison from benefit packages on the basis of this or that professed religious belief.

The ruling raises the question of why, uniquely in the industrialized world, Americans have for so long favored an arrangement in health insurance that endows their employers with the quasi-parental power to choose the options that employees may be granted in the market for health insurance. For many smaller firms, that choice is narrowed to one or two alternatives — not much more choice than that afforded citizens under a single-payer health insurance system.

Furthermore, the arrangement induces employers to intervene in many other ways in their employees' personal life — for example, in wellness programs that can range from the benign to annoyingly intrusive, depending upon the employers' wishes.

And what kind of health "insurance" have Americans gotten under this strange arrangement? Once again, uniquely in the industrialized world, it has been ephemeral coverage that is lost with the job or changed at the employer's whim. Citizens in any other industrialized country have permanent, portable insurance not tied to a particular job in a particular country.

Nor has this coverage been cheap by international standards. American employers can be said to have played a major role in driving up health spending per capita in the United States measured in internationally comparable purchasing power parity dollars, to roughly twice the level found in other industrialized populations. As a recent article in the health policy journal Health Affairs reported, a decade of health care cost growth wiped out real income gains for the average American family during the period from 1999 to 2009.

The Supreme Court's ruling may prompt Americans to re-examine whether the traditional, employment-based health insurance that they have become accustomed to is really the ideal platform for health insurance coverage in the 21st century. The public health insurance exchanges established under the Affordable Care Act are likely to nibble away at this system for small and medium-size business firms, especially those with a mainly low-wage workforce.

In the meantime, the case should help puncture the illusion that employer-provided health insurance is an unearned gift bestowed on them by the owners and paid with the owners' money, giving those owners the moral right to dictate the nature of that gift.

Uwe E. Reinhardt is an economics professor at Princeton. He has some financial interests in the health care field.

© 2014 New York Times

Comments
Editorial: Welcome Bayshore changes still canít stop bad judgment

Editorial: Welcome Bayshore changes still canít stop bad judgment

Itís human nature in following any tragedy to imagine: How could this have been prevented? On that score, the city of Tampa responded appropriately to the deaths this week of a mother and her toddler whom police say were hit by a teenage driver racin...
Updated: 1 hour ago
Editorial: Filling Rocky Point lagoon to build townhomes is an empty-headed idea

Editorial: Filling Rocky Point lagoon to build townhomes is an empty-headed idea

One of the worst ideas in a long time in the field of urban planning received a blessing this month when the Hillsborough County City-County Planning Commission approved a land-use change for a project that calls for filling three acres of water insi...
Published: 05/25/18
Editorial: Searching for the real Adam Putnam

Editorial: Searching for the real Adam Putnam

Send out an Amber Alert for Adam Putnam. The red-haired, affable fellow who has served capably as a state legislator, member of Congress and agriculture commissioner is missing. In his place is a far-right caricature who has branded himself as a prou...
Updated: 2 hours ago
Editorial: A strong economic case for restoring voting rights for felons

Editorial: A strong economic case for restoring voting rights for felons

Floridians are paying a steep price for a system that makes it as difficult as possible for people who leave prison to reintegrate into civic life. Gov. Rick Scottís clemency process isnít just archaic and cruel ó it also wastes enormous public resou...
Updated: 5 hours ago
Editorial: Trump right to cancel North Korea talks on nuclear weapons

Editorial: Trump right to cancel North Korea talks on nuclear weapons

Regardless of the reason, the cancellation of the U.S.-North Korea summit to address Pyonyangís nuclear program is hardly the worst possible outcome of this high-stakes diplomatic gamble. President Donald Trump was unprepared, North Koreaís Kim Jong ...
Published: 05/24/18
Updated: 05/25/18

NFL kneels before the altar of profits

The owners of the 32 National Football League teams sent a wrongheaded and, frankly, un-American message to their players Wednesday: Expressing your opinion during the national anthem is no longer permitted."A club will be fined by the League if its ...
Published: 05/24/18

Editorial: A positive first step in ensuring student access at USFSP

As a task force sorts out countless details involved in folding the University of South Florida St. Petersburg back into the major research university based in Tampa, ensuring access for good Pinellas students remains a concern. An enhanced cooperati...
Updated: 5 hours ago
Editorial: Banks still need watching after easing Dodd-Frank rules

Editorial: Banks still need watching after easing Dodd-Frank rules

Legislation that waters down the 2010 Dodd-Frank law and was sent to President Donald Trump this week is a mixed bag at best. Some provisions recognize that Congress may have gone too far in some areas in the wake of the Great Recession to place new ...
Published: 05/23/18
Updated: 05/24/18
Editorial: Honoring our fallen soldiers on Memorial Day

Editorial: Honoring our fallen soldiers on Memorial Day

The rising tensions with Iran, the resurgence of violence in the Mideast and the uncertainty over a nuclear disarmament deal with North Korea combine to create an unsettling time this Memorial Day. These grave threats to peace are another reminder of...
Updated: 2 hours ago

Another voice: The chutzpah of these men

A new phase of the #MeToo movement may be upon us. Call it the "not so fast" era: Powerful men who plotted career comebacks mere months after being taken down by accusations of sexual misconduct now face even more alarming claims.Mario Batali, the ce...
Published: 05/22/18
Updated: 05/23/18