Daniel Weintraub: Breaking free from employer-managed health care
By Daniel Weintraub -- Bee Columnist
Published 2:15 am PST Tuesday, February 21, 2006
Imagine for a moment that your employer was required by law to buy a plan to manage your nutrition needs - rather than simply paying you a wage, out of which you buy the food you want to eat.
Or suppose the government required your employer to pay for a housing plan, rather than paying you and letting you decide where and how to live.
Finally, consider what it would be like if the company you work for was mandated to design and finance a transportation plan for you, with a list of options for how you could get to work and back home each day.
Each of these scenarios brings a few things to mind.
First, you'd probably get paid a lot less than you do today, because your employer would be diverting much of your current wages to pay for these plans instead.
Second, you would have less choice than you do now, because your employer would have to standardize these food, housing and transportation plans to fit the needs of many workers.
Third, the service you would get from your local grocery store, landlord or automobile dealer would probably be worse, since your relationship with each of them would now be muddled through the entry of a third party, your employer. Your local grocer would have a greater incentive to try to satisfy his real customer - your boss, or worse, the food management company your boss chose - than to serve your needs.
Fourth, the costs of each of these goods would tend to rise over time - especially if you and your fellow employees were able to eat as much as you liked, or live in any size house or drive as far as you wanted within the choices provided. While large employers might be able to use their superior bargaining power to drive down costs a bit, their power in the marketplace would be outweighed by the increased cost of providing food, housing and transportation in quantities unlimited by the discipline that comes when a consumer pays for something out-of-pocket.
Finally, as the costs did start to rise, you would feel less secure about where your next meal was coming from, or whether you'd have a place to live tomorrow or a car to drive to work. With the management of these essential items in the hands of a third party, you'd feel vulnerable, worried about whether they might cut back on your choices or on the quality of the offerings in order to save money.
Sound like a good deal? Well, that's exactly the kind of health care system we have today. While individuals once managed their health insurance themselves, paying for it out of their wages, employers began doing that for them during World War II as a backdoor way to increase compensation in an era of government-imposed wage and price controls. The custom stuck, the government rewarded it with tax breaks and today more than 60 percent of us have our health care managed through work.
Not coincidentally, health care is the one essential in our lives that is most often described as being "in crisis." While some people have access to better food than others, nobody in America goes without food today, thanks largely to food stamps, which give people a chance to obtain essential nutrition without involving employers or the government (too much) in managing their choices.
Some of us certainly live in better housing than others. But that's no business of our employers. To the extent that the government has decided that some people need help paying for their housing, we have provided vouchers for rent, with minimal regulation on how those stipends can be spent. The housing the government provides directly, in contrast, is mostly in lousy neighborhoods, crime-ridden and poorly maintained.
Finally, while some of us drive nicer cars than others, our employers are not responsible for this, and neither does the government inject itself into the equation. The state does provide public transit and subsidizes it from tax revenue in part to enable the poor to have access to transportation.
Now comes a national movement to require employers, especially large ones, to spend a certain amount of money on health insurance for their workers or pay a tax to the state to cover their care. In California, a state senator says she plans to introduce a version of this bill.
It's odd that just when the informal system of having employers managing their workers' health care is in danger of collapsing from the weight of the problems it created, some politicians want to lock that system, with all its flaws, into place with a new law.
Shouldn't we instead be looking for alternatives? Maybe, instead of trapping us into having our health care managed by others, we should emulate the ways we have more successfully provided food, shelter and transportation to almost everyone who needs it.
Individual choice. Individual responsibility. Voluntary transactions. And targeted help for the few who cannot afford to buy what they need on the wages they earn, with the burden of financing that assistance falling on all of society, not just on a few.
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