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Friday, July 26, 2013

Health Insurance and Employment

The past few months have demonstrated the difficulties resulting from continuing to link health insurance to employment.
First, we see some with strong religious convictions, including the Catholic Church, fighting to exclude the coverage of contraception and abortion from the insurance they will purchase on behalf of their employees. Their claim is based on the first amendment "free exercise of religion" clause. The Catholic faith forbids contraception -- a rule much honored in the breach by Catholic families. So providing contraceptive coverage violates that rule. The Department of Health and the Church came up with an awkward compromise, but legislation by private firms to avoid providing such coverage is on-going.
Second, only full-time workers (over 30 hours per week) are required to be covered by employer based Obamacare. Accordingly we see firms working toward reorganizing their work forces so that the normal work period is about 29 hours per week. The result being that firms will not have to provide health insurance to the bulk of their employees. Of course, senior management will continue at 40 plus hours and retain their "Cadillac" health insurance plans.
With the delay in the implementation of the employer mandate, states are free to experiment. It would be very fruitful if scenarios could be devised that removed the employer role in health insurance. Perhaps we could begin by ensuring that the employees of small employers (say less than 50 employees) were required to receive their insurance through the exchanges rather than through employers.
This would be beneficial to small businesses who now pay higher premiums than large businesses and would be advantageous to the 25% of the employees of small business who are presently uninsured.
Working out the details for disentangling healthcare from employment may be tricky. Firms that cease to provide healthcare should increase cash wages so that employees will be able to afford insurance bought through the exchanges. There will need to be some oversight to ensure that this is done.
Taking these first steps with small firms would provide a wealth of experience to guide the process when we dissociate, as we must, health insurance from  employment for larger firms.

Sent to New York Times