Uwe Reinhardt has published an op-ed piece in the NYT about the illogic about employee-sponsored health insurance plans in connection with the recent Supreme court decision (Burwell v. Hobby Lobby) (see: The Illogic of Employer-Sponsored Health Insurance). Below is an excerpt from it:
...[T]he premiums ostensibly paid by employers to buy health insurance coverage for their employees are actually part of the employee’s total pay package...and that the cost of that fringe benefit is recovered from employees through commensurate reductions in take-home pay. Evidently the majority of Supreme Court justices who just ruled in Burwell v. Hobby Lobby case do not buy the economists’ theory. These justices seem to believe that the owners of “closely held” business firms buy health insurance for their employees out of the kindness of their hearts and with the owners’ money. On that belief, they accord these owners the right to impose some of their personal preferences...on their employee’s health insurance. In the ruling, the owner of Hobby Lobby, a chain of craft stores, gained the right not to include certain contraceptive goods and services in the insurance bought for employees, because use of these services conflicts with the owner’s Christian beliefs. Although the justices argue that their ruling is narrowly confined to contraceptive services, one must wonder what other items other business owners in the future may seek to jettison from benefit packages on the basis of this or that professed religious belief. The ruling raises the question of why, uniquely in the industrialized world, Americans have for so long favored an arrangement in health insurance that endows their employers with the quasi-parental power to choose the options that employees may be granted in the market for health insurance....Furthermore, the arrangement induces employers to intervene in many other ways in their employees’ personal life – for example, in wellness programs that can range from the benign to annoyingly intrusive, depending upon the employers’ wishes.
The illogic of employee sponsored health insurance, explained by Reinhardt, is that the employer take some of the money normally paid to an employee as salary and uses it instead to buy health insurance for that employee. In so doing, the company gains certain opportunities and advantages that it would not normally have. These include the ability to limit the number of health insurance plans from which the employee can choose or the opportunity to not cover the cost of contraceptive goods and services because this is antithetical to the company owner's religious beliefs.
Why and how did employee-sponsored health insurance evolve in the first place? Some of the labor unions favored such a system because it constituted a bargained-for benefit that did not count as employee salary. Employees favored this approach because they received benefits that were not taxed. Legislators liked it because is provided broad health insurance for workers with less federal red tape and control than government-run health systems.
I personally have mixed feelings about what Reinhardt calls the "annoyingly intrusive" demands in wellness programs. I think that the obesity epidemic in the U.S. is one of our biggest public health crises. I don't believe that the majority of overweight Americans are willing or able to reduce their weight and improve their health. It's certainly big-brotherish but I do like employer programs that encourage weight loss. The employers like them because they saves them money and avoids unnecessary absenteeism.