I’m thrilled that lawmakers seem to finally be dealing with, or talking about dealing with, or at least planning on talking about dealing with the issue of healthcare costs and separating them from employment. Utah’s own Mike Leavitt spoke last Wednesday on the White House’s new ideas about healthcare. While I’m not sure I like the proposal, I do like the fact it’s being discussed and change seems to be in the air. I’ve never seen the reason for healthcare being an employer expense, other than that it’s good for the healthcare providers. On the other hand, there are plenty of reasons for it not to be linked to employment.
First of all, the current structure is unfair. Not just slightly unfair, but wildly unfair. If your employer pays your health insurance premiums then that is compensation, but this compensation isn’t taxed. However, if you are self-employed or your employer doesn’t give you health benefits and you go and buy them yourself, you don’t get any tax break.
Second, people sometimes lose their employment because they can’t work due to health related reasons, and if their benefits are tied to employment then they lose their benefits at the time when they need them most.
Third, tying health benefits to employment creates an incentive for employers to hire young, healthy, single males. Why? Because their premiums are lower. If I hire a husband and father of four, I’m going to pay four or five times as much in premiums as I will for a YHSM. That can easily add up to $9,000 per year extra for hiring the family man and therefore puts him at a disadvantage when it comes to getting a job. I don’t usually think about this because it’s more important to me to have the right person for the job and I have a small company so the total cost doesn’t seem that big, but if you think people aren’t discriminated against in the workplace based on their cost to the company then you’re living an illusion. A company of 100 could save almost a million dollars per year by hiring single males instead of married males with children. That’s tough for an employer to ignore.
Breaking the bond between employment and health care would stimulate entrepreneurship. For every four or five employees to whom I now provide health benefits I could hire one more employee if I didn’t have to pay for their benefits. It would benefit working families and an aging population since the cost of their premiums relative to a younger workforce would no longer be an issue.
Again, I’m not sure what the ideal plan is. I don’t think it’s the one being proposed by Mr. Leavitt’s employer, and it may or may not be the plan Mitt Romney enacted in MA, but I’m pretty sure it’s not the plan we’ve got right now.