Sunday, January 04, 2009

Employer-Provided Health Insurance

I ask this simple question: why, in a logical world, would employers be responsible for employee health insurance? Employers are not responsible for employee automobile insurance, sustenance, or living space; why is health insurance such a political hot potato?

And why would employee mobility in the absence of an "employer mandate" be a bad thing?

Which enumerated power allows Congress to require employers to provide health insurance?

7 comments:

Anonymous said...

Which federal law requires employers to provide health insurance? Perhaps there is, but I can't find it. As far as I can tell, the employer mandates are mainly from the states. I believe the Constitution was set up to allow that. There is also a general public expectation of health insurance, which may not be logical.

Here is what I did find on federal regulation:
The McCarren-Fergusan Act allows Congress to regulate insurance as interstate business, which it often is. It "does not itself regulate insurance, nor does it mandate that states regulate insurance." (http://en.wikipedia.org/wiki/McCarran-Ferguson_Act, 4 Jan. 2008)

Employers subject to ERISA are not required to "provide health insurance to its employees or retirees, but it regulates the operation of a health benefit plan if an employer chooses to establish one." (http://en.wikipedia.org/wiki/Employee_Retirement_Income_Security_Act,4 Jan. 2008)
"The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that sets minimum standards for most voluntarily established pension and health plans in private industry to provide protection for individuals in these plans." (http://www.dol.gov/dol/topic/health-plans/erisa.htm, 4 Jan. 2008, emphasis added) The act has federal tax implications, which is Constitutionally a federal responsibility. Additionally, the fourteenth amendment requires that no state "deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws." That should allow Congress to regulate insurance so far as the regulation requires equal protection.

Darren said...

The "general public expectation of health insurance" dates back to World War II, when our socialist government implemented *wage* and price controls. Perks were outside of the limitations, so some (larger) employers started offering health care as a way to entice workers because they couldn't use higher salaries to entice them. Among the biggest of these was Henry Kaiser, whose name is all but forgotten as a shipbuilder but lives on in Kaiser Permanente.

In other words, the government started this business through the universal rule of unintended consequences.

DADvocate said...

My employer partially pays for health insurance if we take one of the plans offered through the company. It's a good benefit but shouldn't be required.

I read that the feds may try to require companies to provide mental health coverage at the same level as other coverage. Right now my insurance pays 50% to in network providers. I wonder what increased coverage will do to premiums.

Of course in the long run the working person ends up paying for everyone's health insurance under such government mandates. The government produces very few goods or services that people voluntarily purchase. The money for these programs are taken from citizens under threat of imprisonment. And, with very few exceptions, only working citizens have money to take.

Quincy said...

Which enumerated power allows Congress to require employers to provide health insurance?

The 16th Amendment. The historical accident is that WWII employers under wage controls were using health insurance and other things as fringe benefits to attract workers. When the FDR White House tried to clamp down on the tax loophole that existed for these, the employers fought it and won.

That's why, to this day, employer-purchased health insurance is a tax-free benefit to employees.

allen (in Michigan) said...

I remember reading, a long time ago. that the reason for health benefits was that they were a pretty inexpensive benefit during WWII.

Such cost as there was was off-set by making health benefit premiums a business deduction cutting their effective cost by a third saddling the tax payer with the difference.

mazenko said...

Darren,

You're correct in linking employer-based health care to wage/price controls following WWII. While those moves in many ways contributed to the unprecedented levels of growth in the US economy, we are experiencing somewhat of a "chickens coming home to roost" effect. Fifty years ago, labor (and various political leaders) pushed extensively to replace employer care with a separate system overseen by the government. When government balked, union pushed to guarantee the employer system. Some results have been monopolies by providers, decreased competition, rationing, and foreign companies who can offer lower prices because of national health care.

The clearest solution in my estimate is an expansion of the FEHBP from its current pool of nine million employees to a larger pool of 300 million payers. It would offer choice, encourage competition, lower prices, and maintain a blend of public/private health care. Medicare could be ended and effectively blended into the system over time. The Wyden-Bennett plan is also an option that blends public and private care, much like Switzerland where everyone qualifies for basic health care, and people purchase whatever additional coverage they prefer.

Ellen K said...

It's funny, but although every job I have ever had says that employers provide insurance, it's always come out of my paycheck. If it's just a matter of pooling risk, then let me find a company and become part of a pool where I can afford insurance. Right now, my family's bill is $500 per month. I am sure if we returned to the days where all medical expenditures were deductible, much of the insurance cost would go down. Instead, we are stuck with the post HMO hybrid that creates paper and serves no one.