Why do employers continue to pay for health insurance?

[theaocp]

It's an interesting question, since it seems like a massive expenditure that appear to have no matching upsides for the employer. Thoughts?

[Matt_in_STL]

1. It has an upside for employers

You can't run a business without healthy employees. If your employees are always injured or sick they will not be able to provide you with any production. In the end, not offering health insurance in some instances could cost an employer more than they spend on it.

[Zalatix]

10. Tons of businesses run without offering health insurance. Sick employees get fired and replaced.

The employer's market is savage like that.

[Matt_in_STL]

20. I definitely agree with your point

However, in many jobs you require a certain set of skills in which it may cost you more to fire the current employee, bring in a new person, and train them on what you need them to do. This is especially true in companies where you may have proprietary products or software you are using. At my last employer, we utilized a proprietary software that was so burdensome it could take 6 months to bring a new employee up to speed. Not necessarily beneficial to us to have work slow down due to this.

[Zalatix]

23. Yes, that much is quite true.

[dionysus]

47. not so much in skilled industries. for unskilled labor it is more common.

[Zalatix]

48. Yeah, this is going to sting unskilled labor, big time.

Thing is, I'm a Democrat because I advocate for all labor, unskilled or otherwise. My worst fear is that this is going to bite unskilled workers square on the ass.

[HopeHoops]

2. It's cheaper to get a group plan than to pay enough for employees to buy their own.

[riderinthestorm]

7. I don't think that's necessarily true. Most employers pay a percentage of the premium

50% at the last place I worked but it can vary. We pay 50% and our average cost per employee is $3500 each

If you think about much you pay in premiums, and that's roughly half, and for some companies they're subsidizing an even greater percent, then you have the final tally for what it costs the company annually to keep health insurance going for their employees.

The penalty is $3000/year per employee. For me personally, and I know virtually every business in the US is making this calculation right now, I will save money by simply paying the penalty. I can stop offering it, negotiating it, hassling with it. I can be done with it and save the money. For big companies with designated administrators they can eliminate those positions as well, which are usually high paying jobs.

Morally I can walk away as well since I know my employees can and will be able to find it elsewhere.


(FWIW, we won't drop it because my husband has a serious PEC and we can afford it for now.)

[Zalatix]

13. Yup, your calcs are correct.

I won't drop it because it's fucking inhumane.

[Ghost of Huey Long]

21. wow, do you teach Ethics classes?

well, can you start? Please!

[Zalatix]

22. Other businesses won't listen. Sociopathy is the core of capitalism.

Other people are doing much better than me because they screw over their employees.

[SoCalDem]

26. And THAT is how we will FINALLY get to universal coverage

the middles & upper-middles have not been all that jazzed to fight for some poor people somewhere getting coverage, but when a boss says "No soup for YOU", and does NOT even add what he/she was paying on their behalf to their wages or as a bonus, there will be people in suits on the streets..

A family making 40-60K a year with no affordable health insurance is a force to be reckoned with, and that's when the whole game changes.

Right now there is just nibbling at the edges, and patching holes, but when the employers finally stop tying work to health, watch a real healthcare system develop.

[kestrel91316]

29. This is one of the things I have been saying. ACA has flaws which will become glaringly obvious

over time, and anger over those will give single payer real momentum.

[closeupready]

32. Yes, agreed. This is the inherent flaw in "every man for himself".

If everyone behaves as a rationally selfish actor, then that will help pave the way towards single payer.

I was not in favor of finding the mandate constitutional, but just in the past couple days, I'm feeling even BETTER about single payer/public option.

I think this ruling has helped it along.

[riderinthestorm]

38. Yep, I've been saying this for 2 years now. And I agree 100% that change will come when

the remaining middle class managers finally lose their employee sponsored health care. They will scream bloody murder and demand single payer. Right now, this debate is all about the poor so they have the luxury of denigrating their "inferiors". Once this issue becomes universal for everyone, then the screws may turn sufficiently for the real change.

The system is too broken. They have patched it for the moment but it's in too much trouble.

[ieoeja]

34. Why did you not drop it before?

Now dropping it will cost you $3000/employee. Before it would have cost you $0/employee.

[riderinthestorm]

37. My husband is only 4 years out from his last round of Stage IV, Grade IV lymphoma.

Its too serious a PEC and he's not past the 5 year remission date where we felt "safe" enough to let it lapse for the 6 month mandatory waiting period. His next treatment will be stem cell transplant which will cost millions (edited to add, his next course of treatment will be stem cell transplant IF he relapses - which hopefully will never happen)

Stuck in the proverbial financial mud. Story of my life.

[HopeHoops]

44. You just made a DAMN good argument in favor of single-payer!!!

Insurance companies shouldn't be in the business of making money. The hassles for the insured are only getting worse.

[stlsaxman]

3. most qualified employees won't answer an ad that doesn't include healthcare.

if we had single-payer the job market would sky-rocket.

[riderinthestorm]

11. Really? In this job market? You think anyone can afford to be that selective?

My 24 year old and her 28 year old partner have struggled mightily to land jobs, both have masters and have high demand jobs. Health insurance was the LAST thing they were thinking of when applying.

They were desperate to find jobs, period.

Virtually every single one of their friends was in the same boat. They were way more interested in enough salary to cover their student loans than worrying about health insurance.

[Zalatix]

14. And due to the tax/mandatory purchase, they won't be covering their loans now.

[KansDem]

27. It was all part of a strategy to attract and keep competent talent

There was a time workers would stay with the same company for their entire work career. Good health care coverage was a part of that.

It also helped build loyalty between the worker and the company.

Too bad a lot of that has slipped away...

[kestrel91316]

30. The only work available in my area seems to be P/T, under $15/hr, no benefits.

Oh, there are a few jobs out there that pay really well, but most normal people aren't qualified for them.

[Nye Bevan]

4. Tax loophole.

If an employer pays $1000 per month for your health insurance, your tax bill is not affected. If instead they pay you $1000 per month so that you can buy your own insurance, you owe income tax on that $1000 per month.

[Ghost of Huey Long]

24. and that counts as expenses for the business so the employer pays less in taxes as well

nt

[PoliticAverse]

42. Exactly. n/t

[B Calm]

5. It's a ball and chain they attach

to low wage employees!

[Laelth]

8. Definitely true.

It's also a business expense that they can deduct.

-Laelth

[Nye Bevan]

49. Well

there are lots of low wage employees who would be delighted to be provided with this kind of "ball and chain".

[fizzgig]

6. i wouldn't have health insurance if it weren't for my job

employers can lose a lot of money due to absenteeism due to sickness, it makes sense for them to cover their employees.

[loyalsister]

52. savings and efficiency

Competent employees want benefits, keeping them saves training costs, and when they are healthy the business runs more smoothly

[Ikonoklast]

9. The ACA is a move in the direction to de-couple employment and health care delivery.

How many people are stuck in a job they hate because they can't give up their family's health care that the current employer provides?

If we now move toward single payer, and your health care is no longer dependant on the whims of an employer, people will soon be able to give them the finger and get that new job.

Employers have also been getting killed by health insurance premiums: just recently, GM was a prime example of crushing health care costs for both current and retired employees.

[riderinthestorm]

15. I believe that as well. Employers are going to be dropping coverage. I'm sure of it

Why should they continue to carry it? Its expensive and a hassle, and now there's alternatives for their employees that are now mandated to get it.

[Ikonoklast]

19. Believe it or not, the auto manufacturers are HUGE supporters of Single Payer.

Most, if not all have facilities in Canada, and see how easy it is to just pay their share of the tax supporting the health care system than having to pay for entire departments dedicated to insurance bullshit and endless red tape like they do in this country.

Single Payer would be a boon to most employers, especially the larger ones who would end up saving stupendous amounts of *shareholder money* due to instantly decreased health care premium costs.

(I love telling my Right-Wing pals that, their eyes start spinning in tight little circles while trying to think of a work-around for that one!)

[riderinthestorm]

25. Yup, I've read that as well.

Anyone whose worked outside of the US is also a huge supporter - they've seen a different form of health care payment and delivery and understand how it undermines our health AND our competitiveness as a nation.

Pension funds that have had their reserves sucked up by health care costs for retirees are also behind this.

Honestly, its quite possible that the "mandate" may be the road to single payer (as weird as that sounds). I do believe a lot of corps will drop employee coverage - once insurance is de-coupled from employment it will create the sea-change in mental attitudes (and the even GREATER paper work hassles derived from administering your own health insurance policy) about health care in the US that's necessary to lay the groundwork.

[BlueCheese]

45. It seems to me that the ACA actually reinforces employer-based health insurance.

Before, employers had no government incentive to provide health insurance. Now they face a penalty for not doing so. If anything, that would encourage employers to offer coverage.

What is decoupling employment and health insurance is the ever-rising cost of health care, which is causing employers to walk away, despite the penalty. Or maybe I'm missing something?

[riderinthestorm]

46. Personally, I believe the provision that mandates insurers take every applicant is the key

Before, when many potential employees were seeking a job, benefits were instrumental in luring talent to a firm.

Then we saw reductions in benefits become the new norm (no more pensions - go to 401ks etc. )

Then we saw the economy crash and many jobs became part time, no bennies (or no job at all).

So into this mess we have the perfect storm: ACA requires that insurers take ALL applicants regardless of PECs. So employers are evaluating whether offering health insurance is even a perk worth offering since everyone has to get it anyway, its not some (increasingly rare and valuable) thing.

Weighing whether the penalty is less than the actual policy cost for that employee is simply math for many corporations. They have no moral imperative to their employees and will simply use accounting to make the decision. Especially in this day and age of ever-increasing insurance premiums, many employers will grab onto a fixed $3k penalty instead of trying to hold on to a rapidly changing, hassle-filled, expensive "perk" that really isn't such a perk anymore (since everyone has it).

[soccer1]

51. Wouldn't the insurance exchanges offer a person the ability to move to a job that.....

doesn't offer insurance? Of course, the premiums might be higher because the employer doesn't contribute......single payer is the answer. Some states are already working toward that goal....Vermont, even PA is exploring single payer.

[Lex]

12. Access to healthcare shouldn't be tied to a job

anyway. Everyone should have access to some form of healthcare. Tying it to whether you are employed seems cruel to me.

[riderinthestorm]

16. [phone]. nt

[yardwork]

17. Heavily subsidized tax breaks from the government to corporations for health coverage.

This has been true for decades. We have socialized medicine in the U.S. But only for employees of large corporations or the government. The federal government subsidizes the cost of health insurance purchased by large corporations in the form of tax breaks.

[cbdo2007]

18. It started as an incentive to employees....then turned into something they felt they *had* to offer

which is why McDonald's and Walmart and others started offering shitty plans to their employees. It was still cheaper than plans they could get elsewhere.

It doesn't really matter if a company does or not. If they don't then they'll just start paying more so employees can get it on their own, but they get a deal for bringing in a certain amount of business in bulk. My company pays for about 1/4 of my health insurance cost, which is awesome.

[Live and Learn]

28. Employers aren't really paying anyway.

They consider it part of the cost of hiring you. And you consider it in your part of deciding to take a job. Employers use it as a way of insuring that you buy insurance and stay healthy by taking it out of what they could pay you and giving it to the insurance company.

Plus this way they negotiate cheaper rates for everyone in the company including those at the top. And they get tax breaks. Seems like pretty good incentives already to me. And now they will pay a penalty if they don't.

[closeupready]

31. I know. I don't get that either.

nt

[Gormy Cuss]

33. Because it's a competitive benefit.

Employers who offer group insurance coverage are in a competitive labor market where that benefit is useful for attracting and retaining qualified staff.

When employers don't perceive a competitive advantage to offering it, they don't do so unless there is a governmental mandate to do so.

[Yavin4]

35. You Need Quality Employees To Keep A Business Running

And if you don't offer health benefits, then you won't attract the kind of talent that you need, even in this economy.

Also, corps. can write off the expense on their taxes.

[FarCenter]

36. If you are unemployed and qualified to be a benefits consultant, you should get a job right now

Benefits consulting is a hot specialty right now. (Of course, you only want the job if you are interested in helping employers screw over employees.)

[Quantess]

39. It doesn't seem to make much sense.

[CBGLuthier]

40. Big companies do it because they actually OWN the insurance "company" or are self-insured.

Just another variation on THE COMPANY STORE mentality of giving with one hand while taking back with the other.

[lapislzi]

41. Because some business owners still believe in Doing the Right Thing

My employer is under no obligation to provide insurance to his staff. His legal obligation, before the ACA, was zero.

Yet, for the 15 years I have worked here, he has covered 100% of my insurance costs, and those of my husband and daughter. I pay co-pays and deductibles, which, though bothersome, are NOTHING compared to the tens of thousands of dollars my boss shells out every month for the 35 or so people who work here.

It is a total pain in the ass for him and HR to haggle with the bean counters at Ripoff du Jour, but they do it nonetheless. Because he cares about the people who work here. He visits them if they're hospitalized. He goes to funerals. He (usually) remembers birthdays.

His reward is an unusually loyal workforce. I don't think anyone's ever taken home so much as a Post-It note or fudged their time sheet. If we're late we work our hours, no questions asked. We have an exceptionally civilized office.

I guarantee you my boss will go on paying our premiums regardless of what he might "save" by paying the fines.

And, FWIW, he can't wait until there's universal single-payer. As far as he's concerned, that is the only humane way to deal with health care.

Drop in sometime. You'll see what benefits an ethical employer enjoys.

[Swede Atlanta]

43. I can definitely see the possibility of a gradual reduction in employer-sponsored health insurance..

(1) The employer may drop their plan and simply pay employees extra or give them a health insurance allowance to obtain insurance through the exchanges. This is probably a win-win especially for a small company. Employees might be able to sure less expensive coverage through an exchange than the company can based on their limited number of insured. I don't really understand if the exchanges can also be used by companies.

This only works when the employer has a sense of loyalty to their employees. This company may well fall below the 50 FT employees to be subject to the requirement.

(2) The employer may drop their plan altogether, pay the penalty and walk away. This option may be beneficial to companies that require low-skilled, fungible workers.

(3) Companies that require highly-skilled, highly-trained employees will be the last to abandon ship. They see salary and benefits as a continuum that attract and retain good employees.

But until this plays out in the market, we will not know.

[Marrah_G]

50. Alot of them no longer do

Instead here in MA where it is mandated, they make sure to keep most people as a part time employee.

I work a second job with one of the biggest pharmacies in the country.... You can count on one hand the number of employees at my store who work full time, or even close to full time. They prefer to hire 3 people to split 40 hours then hiring one full time employee.

[lumberjack_jeff]

53. In theory, an employer who pays X for salary and Y for insurance premiums

Would otherwise pay X+Y in salary, thus avoiding 7.65% Y in tax costs. Additionally, since group insurance should be cheaper than individual insurance, the employer is offering something worth more to the employee than the employer's actual cost.

In practice, wages are deflating, since employees will take whatever is offered, so the logic no longer applies.