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Monday, December 12, 2005

Health Care Query 

i have a question regarding health care policy in this country. You hear a lot about companies that are refusing to offer health care to their employees, citing cost concerns. I understand that health care costs (overall costs and insurance premiums) are rising at an alarming rate. I also understand how, for some corporations such as GM and others with highly unionized workforces, the companies themselves are paying these premiums. But, for most companies, isn't it the employees themselves paying the premiums? I know I pay my premiums, because I see them taken out of my paycheck on a pre-tax basis (the tax savings regime being the reason health care is tethered to jobs in this country). So, if most companies, like the one I work for, don't pay the premiums themselves, where is their burden coming from? Why is it so expensive to offer healthcare when it's just passed on to the employee?

Why am I so ignorant I can't seem to answer this question?

UPDATE: In comments, Kate Steadman, who has a health policy blog, writes:
Goldberg,

You are missing a key part in the way we pay for health insurance. When you get insurance through your employer, you split the premium cost. You will pay about half and your employer pays the other half. The premium amount you're seeing is only half the equation.

That's why people in the individual insurance market have trouble. Because their employer isn't paying, they have to pay both parts, which can be prohibitively costly. That, and the policies tend to be thinner than an 80 year old man's hair.
So, I think this makes sense. And, while I think that employers probably pass on their half to employees in terms of lower wages, there are probably several other market forces that prevent employers from shifting 100% of that cost onto employees. And, as you'll see if you ever need to elect COBRA, you're premium would be about double what you see out of your paycheck (and sans preferential tax treatment, too). So, it stands to reason that many employers do balk at providing health coverage.

Anyway, I encourage you to check out Kate's blog if you want to bone up on health care policy.
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