Sunday, February 19, 2012

Why must U.S. rely on employer-provided health care?

Previously published in the Terre Haute Tribune Star, 2/19/12

Even an irregular columnist like me can see “column fodder” in the contraception controversy that is dominating dysfunctional Washington right now. Never mind the disconnect between the U.S. Catholic bishops’ stand in face of the birth-control practices of Catholics (both men and women practice birth control and safe sex). Never mind the bishops riding this moral high horse when they still haven’t figured out which horse to ride in the face of covering up child molestation by priests.

If the bishops aren’t enough, Sen. Roy Blunt (R-Mo.) offers legislation that would allow employers to opt out of paying for any health care they object to on moral/religious grounds. It would be fun to write a column supporting that posturing so that when the inevitable lawsuits come up, the courts and Congress are then deciding what is moral and what is not (think of it as the Jon Stewart objection … no medicine, just laughter, because laughter is the best medicine and that is my moral belief).

Or even better, let’s pass a law that one’s religious and moral beliefs trump all things government. Hindus and Buddhists could refuse to pay taxes that go for beef subsidies, Quakers could opt out of all tax money that goes for war, and we Methodists could opt out of all tax monies that support the production of alcohol (all those corn subsidies for instance). Yes, all that would be just too easy.

It’s not easy, though. What this controversy does reveal is that it is time to change the U.S. reliance on employer-provided health care. This controversy reveals the irrationality of making health care contingent upon being employed.

Health care costs are rising too fast and are now so expensive that it is a drag on U.S. business. Health care costs are volatile, something that businesses don’t like. And rising labor costs should rise with productivity. Rising health care costs have nothing to do with productivity. Hence, in a recession, the provision of and commitment to provide health care is a drag on hiring new employees. It’s been a generation since we had such a deep recession and the slow recovery is surely influenced by labor costs (if taxes are such a drag, then surely so are health care costs). Why should an engineering company also be in the health care providing business?

According to the Labor Department, about a quarter of current employees have been with their current employer for a year or less (this dates back about 20 years). Think about that — about a quarter of people change employers every year, which means they are also likely changing health insurers and very possibly their health care providers. Only about 10 percent of employees have been with their current employer for 20-plus years. And even though they have had the same employer, they may have had multiple health insurers and thus different health care providers because the employer decides to change insurers.

What the Labor Department statistics don’t capture are the employees who would like to change jobs but don’t because of the health coverage. I know people who want to pursue the American dream, owning their own business, but the question of health insurance keeps them from pursuing it. How many public servants are remaining in their jobs, burned out and grumpy, and instead of retiring early, hold on, because of the health insurance, just waiting until they qualify for Medicare. This is irrational. It is also a competitive disadvantage in a globalized marketplace where, like the refusal to adopt the metric system, the U.S. insists on employer-provided health care — and pretty much stands alone.

Employers are the de facto provider of health care in the U.S. With rising costs, employers are looking to reduce costs. “Obamacare” reduces employers’ (insurers’) ability to do this through formerly common means such as not covering pre-existing conditions. The unintended consequences of “Obamacare” will be to create perverse incentives for employers to delve deeper into the lives of their employees. Recently “60 Minutes” reported on employers firing employees, based not on their work performance, but based on their perceived future health care costs, such as those who smoke, are overweight or eat the wrong diet.

Employers justified this based on the fact they pay for the coverage.

Insurance companies are hard enough to deal with; one shouldn’t have to feel their job is at risk because they have high cholesterol, high blood pressure, enjoy beer over red wine, or don’t like to eat vegetables.
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