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July 4, 2014

2

Why Health Insurance Should Not Be Tied to Employment

by Anne Paddock

On our nation’s birthday, we have much to celebrate in the 238 years since our country was founded:  we’ve come a long way with regards to religious freedom and equal rights but we still have a long way to go. This past week the US Supreme Court voted 5-4 that the government cannot require for-profit, closely held companies to provide certain birth control drugs and devices because the provision goes against the owner’s religious beliefs. Whether you agree or disagree with the Supreme Court ruling, this case never should have been entertained by the high court because health insurance should not be tied to employment, and here are the three reasons why:

Tying Health Insurance to Employment is Inequitable

Most people don’t know that prior to WWII, health insurance was not tied to employment. In response to wage control mandates, the US Congress acted to create “fringe benefits” which introduced the whole employer-provided health insurance system we have in place today. For decades,  employers provided and paid for health insurance for the employee and his/her family but as healthcare costs rose, many employers (mostly small businesses) couldn’t afford to provide this benefit so they either switched to lower cost plans like HMO’s, limited the paid coverage to the employee, or simply offered a policy for which the employee could pay for. Well capitalized companies and those with unionized workers tended to pay – and still do – for employee health insurance and often the family coverage which is a significant benefit especially as it relates to our tax code.

Our tax code does not recognize employer paid healthcare costs as taxable compensation which is unfair to those who purchase health insurance on the open market with after tax dollars. In other words, health insurance costs more for those who don’t obtain health insurance through an employer. Estimates vary but approximately 55-60% of the population receives health insurance through employers and, of course, they don’t want the system to change because it works to their benefit but why should employees get free, subsidized, or tax-free health insurance while another group has to use after tax dollars to buy health insurance? Some critics claim that economically, the situation should be reversed with the self-employed and unemployed provided health insurance without a taxable consequence but that option is also unfair.

The tax code should be applied equally to all which means our country should have a healthcare insurance system in place in which the government defines a basic insurance coverage that everyone (except those in Medicaid, Medicare and other entitlement programs) is required to purchase from private insurers. This solves some of the tax benefit inequity and does several other things. First, requiring citizens/residents to buy health insurance helps ensure they are not a burden to other taxpayers. Second, a basic health insurance plan takes religion out of the question except on the personal level. If a woman doesn’t want to use birth control because of religious beliefs, the decision is hers to make but neither she nor anyone else has the right to tell another woman she can’t have access to birth control or devices because it goes against the religious beliefs of an employer. Part of religious freedom is not imposing beliefs on others.

In Switzerland, private insurance companies provide basic health insurance policies but are prohibited from making a profit off the policies. They make their money on the supplemental policies that most people buy for additional coverage and benefits. Switzerland also rebates money back to any citizen whose health insurance and healthcare costs exceed a percentage (approximately 10%) of their income which makes the system more equitable.

Employers Should Not Be Involved in Personal Healthcare

Having employers provide health insurance forces them into the role of big brother which has no place in personal healthcare. Over the past decade, significant press coverage has been given to obesity, lifestyle choices, and religious beliefs relating to personal healthcare. Many of these issues have caused employers to pressure employees to reveal personal medical histories, adopt healthcare screenings, enroll in fitness programs; and deny women access to birth control medication or devices, such as the most recent Hobby Lobby case in front of the Supreme Court where the company declined to offer four types of birth control to their employees based on the religious beliefs of the owner of the company.

That someone’s personal religious beliefs trump the personal healthcare rights of another is disgraceful. Personal healthcare is between the patient, the doctor, and the insurance company and to go one step further: no employer has a right to any woman’s reproductive decisions. If employers were not in the position of providing health insurance, this wouldn’t be an issue.

Tying Health Insurance to Employment is Inefficient

Most companies are in the business of producing a product or providing a service. Having employers provide health insurance is costly in terms of time and staff. For smaller companies, the burden is usually on the owner and for larger companies, dedicated human resource staff are allocated to this function. Then consider the amount of time our government employees have to spend on this issue because everyone disagrees about what type of coverage companies should provide. There is Congress, the Senate, and the Judiciary whose time could be spent wisely on other issues instead of settling disputes between all the various parties who pull the religious and personal freedom card while denying those very same freedoms to those who don’t subscribe to their views.

Health insurance and the parameters are difficult enough without including employers who participate in an inequitable system, try to gain a seat at the table where healthcare decisions should be left to three people: the patient, the doctor, and the health insurance representative, and have to allocate resources that could be better used in their primary mission: to make products or provide services in the marketplace.

2 Comments Post a comment
  1. Randolph
    Nov 29 2014

    No one needs health insurance. Sometimes people need health care. Here are some reasons health care is so high. 1. Insurance company’s act as a middle man. Now the public is forced to buy insurance. We don’t need insurance we need health care. Cut out the middle man. Don’t worry insurance company’s will be ok last time I look at the sky line they owned everything 2. Shortage of doctors. why not have free tuition to med school to build a real force of doctors. remember supply and demand. The government spends a lot more on other less important things. The insurance company’s have it made. I sell real estate. wouldn’t it be nice if everyone was forced to buy a house? Everyone needs one don’t they, why is this not a law. Who needs money if you cant afford one the Gov. can pay. I could go on . The point is this government should not be able to pic and choose what we must buy.

  2. Dec 2 2014

    You have an interesting perspective Randolph. To your answers, I offer the following response:

    “No one needs health insurance.Sometimes people need healthcare”

    On the contrary, everyone needs health insurance. In a system where we all benefit, we must all participate. The one truth is that we all will get sick and need healthcare, some more than others. Some of us will have children with life threatening diseases and require long-term expensive care but all of us will have to deal with life threatening circumstances because we are all going to die. If people do not take responsibility for their healthcare, then the taxpayers shoulder the burden which is unjust. Healthcare is also a limited commodity. Not everyone can have the same care so health insurance helps (but does not make) make the system more equitable.

    “Here are some reasons health care is so high. 1. Insurance company’s act as a middle man. Now the public is forced to buy insurance.We don’t need health insurance we need health care. Cut out the middle man. Don’t worry insurance company’s will be ok last time I look at the sky line they owned everything.”

    The article is not about health care costs. Yes, insurance companies act as a middle man, just as Medicare, Medicaid, the VA and other programs do. Step back and think about car insurance and the virtual universal requirement that drivers have car insurance. The primary reason is so that when people make a mistake, they are not financially ruined AND so that the driver’s mistake does not ruin the innocent. Without car insurance, we could not have the transportation system we have in place today. Again, we all pay into a system in which we all benefit. The young and healthy pay into a system so that the old and sick can be taken care of. One day all of us will be either old or sick.

    Just because you looked at the skyline doesn’t mean your conclusion has any validity.

    “2. Shortage of doctors, why not have free tuition to med school to build a real force of doctors, remember supply and demand.”

    Randall, nothing is free. The government is us, the taxpayers – and providing free tuition to medical school will not solve the health insurance issue.

    “The insurance companies have it made.”

    Sounds like you are quite hostile to insurance companies. Maybe you want to look at other health programs in industrialized nations…it may help you understand why health insurance is needed. What we don’t need is to have employers involved in health insurance.

    “I sell real estate. wouldn’t it be nice if everyone was forced to buy a house?

    No.

    “Everyone needs one don’t they, why is this not a law.”

    People need shelter but not necessarily a house. It’s not a law because if your appendix burst and you need emergency care and didn’t have health insurance, then the taxpayers have to pay your bill. If you don’t have a house, you’re not going to die.

    “Who needs money if you can’t afford one the Gov can pay.”

    Again, Randall the government is the taxpayers. Making flippant suggestions doesn’t further your argument.

    “The point is this government should not be able to pic and choose what we must buy.”

    Yes, Randall they do..but, the government is actually three branches that have checks and balances in place. The persons working in those branches are voted in, appointed, or approved by the taxpayers. The government tends to step in when people are not making responsible decisions and costing the rest of us money. Healthcare is expensive and a great burden on taxpayers who are paying the hospital and medical bills of those who have chosen not to buy health insurance. It all gets back to personal responsibility. We all have to participate in a system in which we all benefit.

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