At last! I resume my exposition on the American health care system. In my last essay, you heard about some ideas for reforming the health insurance system. This included ideas such as tailoring a person’s insurance benefits to his/her lifestyle and change insurance companies to not-for-profit status. But as we all know, insurance companies are far from the only problem in the American health care system. People also spend a lot of time complaining about employer health benefits.
Of course, now there’s some variation. If you work for a major corporation with great benefits, then you probably aren’t complaining too much. You could be on an extremely flexible PPO with no deductible that costs you as little as $50 per month.В If that’s the case, and you’re complaining, then shut up: you’ve got it good. But for everyone else, the plans that an employer does or does not cover can be an area of great frustration. Maybe the plan options aren’t varied enough; maybe the plan you’re on doesn’t cover costs you find very important; maybe the plan you’re on doesn’t allow you flexibility in seeing the doctors or specialists you need for adequate health coverage; maybe your high deductible pisses you off.
For these and many more reasons, employers are often blamed as part of the problem. But unfortunately, it isn’t as simple as most people think. Whatever health coverage an employer does or does not happen to offer can result from a lot more than just a seemingly arbitrary policy decision.
Whatever your reason for being disgruntled in regard to your employer health coverage, it probably boils down to one relatively simple driving factor: cost. Those of us who have great insurance coverage with our employer have such coverage because the employer (for whatever reason) is willing or able to pay more money for our health insurance. But make no mistake: someone has to pay for your health insurance costs. If you feel like you aren’t paying much, then that means that your employer probably is.
Thus, for those employers who are not paying much, their employees are stuck with the bill. But again, this isn’t just about wanting to screw over your employees, it is about cost. Let me explain through an example.
Let’s say that an employer can afford to spend $100,000 on an employee with your particular job. This $100,000 would include far more than just your salary. It would include the desk you sit at, the computer you use, the power that computer uses, the phone line hooked up to your phone, your portion of the rent for the building you work in, etc. Another such cost includes employee benefits. So let’s say that your salary, after all costs have been figured in, out of that $100,000 would turn out to be $75,000. But let’s say that does not include health insurance. Let’s say that for a good health insurance plan, it would cost another $5,000 per year, per employee. That means that your salary would drop to $70,000 if they provide good health coverage – but wait a minute. If you were to just purchase that health coverage on your own, chance are pretty good that the cost would end up being approximately the same amount.
The purpose of this example is to illuminate the fact that someone always has to pay. If your employer is paying a lot for your health insurance, that means they’re paying less to your salary. If they’re not, then you’re getting more in your salary and you can afford to purchase better health coverage yourself. Unfortunately, it is usually not this clearly spelled out in your salary and benefits package when you get a new job, as it’s probably unknown to 99% of workers what their company really spends on health insurance. But you don’t need to know, because simple economics tells us health benefits are necessarily a cost incurred by a company which is figured into your compensation package.
So look: Don’t get too mad at your employer, because if they’re taking a lot of your paycheck out for health coverage, then you probably have great coverage and will incur very few out-of-pocket expenses. If they have no health coverage at all, then that means your salary is higher, so health coverage should be your responsibility. Any way you cut it, you aren’t really worse off either way, because someone must incur this cost in the end.
But what about those employers who do not offer any health care coverage. Sure, that means your salary might be more, but isn’t it kind of a bum move to not even give people the option to have health coverage through employer benefits? If you work for a large corporation, then yes, I’d say this is a little bit sketchy. Large corporations can generally get very good deals on pricing packages for health insurance, which would help to minimize your health care costs. This is one of the benefits of working for a large corporation.
But for the small businesses, it’s another story. Some may offer health coverage, but if they do, it’s likely expensive. And this makes sense. The cost to insure less people is going to be greater, as economics dictates that without the ability to purchase in bulk paired with less bargaining power results in a higher cost. But again, this is neither the fault of the small business owner, nor the fault of the federal government, nor anyone else. This is just the way economics works, and it makes sense. If I have a workforce of 10,000 people to insure, an insurance company should give me a better deal then if I have a workforce of 10. That is, as long as it’s a for-profit organization (see my last essay for the not-for-profit possibility, which would probably eliminate pricing discrimination).
But finally, I would like to argue that the market forces will act on their own to punish those employers who do not offer good health coverage. The logic here is quite simple: healthy workers are more productive. If you have poor health coverage, you are less likely to be healthy. Thus, if a company provides poor health coverage to its employees, they will be less productive and its profits will be worsened.
For example, let’s say that you have a bad health care plan with a very high deductible. And let’s say you have a sinus infection. Obviously, your productivity at work, so long as you have a sinus infection, is going to be significantly worse than when you’re healthy. Yet, if you have to pay a high deductible, you might be more likely to try to let the sinus infection run it’s course, instead of going to a doctor (paying his/her fee) and getting some prescription antibiotics (and paying for them). But if you had great health coverage, then nothing is really preventing you from getting healthier as quickly as possible, optimizing your productivity.
A further benefit to companies that offer good health coverage is less nuanced: people like good benefits packages. If you are a great candidate for a job and you are trying to choose between two companies which are comparable in every way, but one has great health care benefits and the other does not, then your choice becomes obvious: You are going to work for the company that has the better health care benefits. Thus, companies can attract better employees, and again, have greater productivity and profits, if they choose to provide their employees with good health care benefits.
So I think we have discovered a few important things here. First, a worker should generally be indifferent to whether or not his employer covers his health care. Either way, the employee will end up paying, as employer coverage merely means a lower salary which could have been used to pay for health care on his/her own. Yet, an employer should see a few very key advantages to providing great health care coverage to its employees: healthier employees are more productive, and great benefits packages attract great employees. Thus, the onus here is basically on the businesses to do the right thing, which happens to coincide with their best interest. If a business chooses to have poor health insurance coverage, then it has to face the consequences of this choice. But either way, an individual really isn’t any worse off, as s/he will ultimately end up paying for his/her health care no matter what their employer chooses.