Network News

X My Profile
View More Activity

Why do employers want to continue providing health-care benefits?


One of my standard questions when I talk to business types is why does your business, or any business, want responsibility for your employees' health-care coverage? After all, businesses aren't interested in their employees' housing decisions, or their choice in cars. Why health care?

There are a lot of answers to this question, most of them unsatisfying. But that may be because it's the wrong question. If we were rebuilding capitalism from scratch, employers may well decide to let someone else worry about health care. But the relevant question today is why they want to keep offering health care, rather than embracing one of the alternative proposals on the table.

A recent conversation provides a possible answer. Employers, this observer said, admit that this is a bad system, but at least they've got their hands on the steering wheel. If the government takes control of health care, then all decisions will be made by politicians and the electorate. And politicians and the electorate will continually want more generous benefit packages. But they won't want to pay for therm. So they'll raise taxes on businesses and they'll raises taxes on the rich. The business community isn't a big fan of either approach.

When you read polls like this one, showing that the only popular way to pay for health-care reform is to tax the rich, it's easy to understand why they're scared. On the other hand, their understanding of the politics seems flawed. If employers backed alternative funding mechanisms (ending the tax exclusion on health benefits, for instance) and could persuade some Republicans to provide the Democrats cover, then they could have their preferred financing mechanism. Forcing Democrats to go it alone with no extra votes providing a margin of error means they'll inevitably congregate around the most popular financing mechanisms, even if those aren't the best financing mechanisms.

Photo credit: Brendan Hoffman/Getty.

By Ezra Klein  |  November 18, 2009; 10:21 AM ET
Categories:  Health Economics  
Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   StumbleUpon   Technorati   Google Buzz   Previous: Reid 'very pleased' with CBO score
Next: Republicans more interested in ideological purity than Democrats


Life would be so horrible for everyone if tax rates were the same as under Clinton!

Posted by: AZProgressive | November 18, 2009 10:27 AM | Report abuse


you've hit the nail on the head. Business owners don't trust politicans to get anything right. They know how screwed up the system is but it would only be worse (in their opinion) if government was more involved than they are.

This coming from someone who speaks to about 400 business owners a year about their healthcare at a time when their costs are going up and they're most vulnerable to HATE the current system.

I'll also continue to refer you back to the SFC 1:30 AM session where Kerry and Bingham blasted the Wyden Ammendment.

Its all about control. Its always been about control.

Posted by: visionbrkr | November 18, 2009 10:41 AM | Report abuse

Ezra - is taxing health care benefits even popular among Democrats? Unions are against it, some Senate finance Dems were against it and the House didn't include it in their bill. Business leaders may be justified in thinking that if they support reform (thereby increasing its chance of success) they'll get the focred increase in spending without the change in funding mechanism.

Posted by: mbp3 | November 18, 2009 10:46 AM | Report abuse

There's business and there's business. Small business owners and entrepreneurs, who now have to use the private insurance market, should (and do) want the public option and strong exchanges. The biggest and best connected businesses will continue to game Congress and fix the system to their benefit, whatever the system.

I'm not convinced that businesspeople really know what is in their economic interest any better than anyone else. They are deeply coinservative in preferring the devil they know. But Ezra is right that the GOP has let political posturing take them right out of the game. Better for me, since I'm not rich, but I'd really like to see Chuck Grassley lose next year.

Posted by: Mimikatz | November 18, 2009 11:08 AM | Report abuse

Shorter version. The price of objecting to any and all reform (the party of no) is losing your seat at the table.

Posted by: PhD9 | November 18, 2009 11:18 AM | Report abuse

I'll go out on a limb here and say that any bill that reaches the President's desk will include only those revenue-raising measures found in the bill passed by the House; that is, any revenue-raising provisions added by the Senate will disappear before enactment.

This implies that CBO scores based on Senate-added revenue-raising provisions are ultimately meaningless.

Posted by: rmgregory | November 18, 2009 11:20 AM | Report abuse

Ezra, I can't imagine why it would suprise you that most businesses are opposed to the various Democrat Obamacare iterations. Every one of them either contains a fine for businesses that don't provide health insurance and/or tax on the "rich" (small business owners) to fund Obambacare. I'm sure most companines would love to get out of the healthcare busines, as long as their competitors got out also. However, if they had to choose between controlling their own healthcare plans or being forced by the government to not only provide healthcare but what type of healthcare to provide, I'd be willing to bet it's an easy decision.

Posted by: RobT1 | November 18, 2009 11:20 AM | Report abuse

I know it's hard to think out of the box, but how about just asking which of the ways businesses are paying now they prefer?

Every Fortune 500 company is doing business in some other country, usually many other countries. Why not ask them to compare their experiences with health care financing elsewhere? What do their internal employee surveys indicate? Are their US employees more satisfied than those in say, Germany or Switzerland?

Could those businesses live with paying an 8-10% payroll tax into a private fund to cover a national program with the freedom to providing supplementary coverage to their employees?

You can't just ask whether they want to get out from under health care, give them some options beyond tax supported, single-payer.

Posted by: Athena_news | November 18, 2009 11:49 AM | Report abuse

Wasn't it Tony Benn in Sicko who said "Keeping people hopeless and pessimistic - see I think there are two ways in which people are controlled - first of all frighten people and secondly demoralize them." How many people would quit their lousy jobs and go start their own business if they didn't have to worry about health insurance? If they weren't afraid of getting sick and being bankrupted? You think employers don't know about joblock?

A lot of employers want their hands on the wheel of health insurance coverage because without it there would be a lot more people walking in and telling them to take their job and shove it.

Posted by: steveh46 | November 18, 2009 11:56 AM | Report abuse

"Tax the rich" may also be a particularly resonant option right now because the electorate is pissed off that the rich have gotten the sweet end of the deal on bail-outs, GWB's tax cuts, and so on.

Income inequality is soaring in our country. History tells us that is unsustainable. The rich need to find a way to start playing the game or the peasants may take up their pitchforks rather than their tea bags.

Posted by: RalfW | November 18, 2009 12:48 PM | Report abuse

Whether there's any health reform legislation, good or bad, employers do, and will, invest in their employees' health - more or less - every day they open for business. That's especially relevant in our post-industrial world, where service businesses predominate.

In other words, it's silly to imagine that smart employers would suddenly choose to do NOTHING of their own volition pertinent to their employees' health, even in the event full-on single payer-style reform was implemented.

It's not that employers particularly want to pay for health insurance (other than because their competitors do). That's simply the "form factor" that provides most employers the simplest path to something like a workable health policy for them. Any that are giving it thought realize that improving their workforce's health can be a competitive advantage, and would avail themselves of better alternatives were they easier, more budgetable, and/or perceived as competitive.

There are plenty of tactical reasons why anyone thinking clearly about any health reform worthy of the name practically has to incorporate plans for taking advantage of workforce and workplace efficiencies. I won't drone on about those here, but those interested can find the seeds of examples in Christensen/Grossman/Hwang's The Innovator's Prescription, among other sources.

Posted by: gjudd | November 18, 2009 1:50 PM | Report abuse

"...businesses aren't interested in their employees' housing decisions, or their choice in cars."

But business do provide housing allowances and company cars, when those forms of compensation present tax benefits or other advantages.

Posted by: tomtildrum | November 18, 2009 2:34 PM | Report abuse

standard executive compensation packages reimburse executives for health care expenses

company health insurance requires certain co-pays etc, that employees incur, there are also things that are not covered

executives do not feel this kind of health insurance is appropriate and require want their health costs paid by the company

his is a symbolic issue, the monies involved are unimportant

the prevailing idea is that the company should provide executives with better health insurance than other employees

by and large the executive class is shielded from the reality of health insurance

they have no stake in the system as it is

Posted by: jamesoneill | November 18, 2009 9:28 PM | Report abuse

It is really simple. A universal coverage that all are created equal. I think its called medicare and I don't see anyone complaing except the healthcare folks who want more money. The patients love it. I have never seen a medicare person get involved with whether a person needs a treatment. However, I understand the private insurers tell doctors and hospitals what they will allow and what not.
I can't imagine any business that has to pay more not passing this onto the customers and cutting the pay of the employees. These are the guys who should worry about a employee plan.

Posted by: ephetsgma | November 23, 2009 1:18 PM | Report abuse

The comments to this entry are closed.

RSS Feed
Subscribe to The Post

© 2010 The Washington Post Company