Should Your Employer Pay for Your Health Insurance?

Employee health care costs.

As the national debate on health care reform ramps up, we're going to hear all kinds of claims about what is or is not good for business. To me, though, it's pretty clear-cut: a system that gets me, as a small-business owner, out of the health-insurance business will be good for business, and anything else will either be no help or will make things worse. Sadly, it doesn't look like President Obama is headed in the right direction.

We offer a health insurance plan at my company, NewWest.Net—partly because it's the right thing to do, partly because it's important in attracting and retaining employees, and partly because my family and I need it as much as anyone. The plan is nothing to write home about—very high deductible, no dental or vision, 50 percent employee co-pay on the premiums—but it's a lot better than nothing.

Yet the feeling I've had from the moment I started looking at company health plans is, why is this my responsibility? Quality health care is a societal good, so why should it be the obligation of private-sector entities to provide it? Why would we assume that health insurance should be a "benefit" of employment? Why is America the only major industrial country that makes health insurance an employer duty?

It is something of an accident of history that employer-provided health care became the norm in the United States to begin with; companies began offering health care as an inducement to circumvent wage controls during World War II. The federal government then encouraged the trend by providing a tax deduction for medical-benefit contributions.

In the 1950s and 1960s, when American industry was flush, providing good health benefits was an easy thing to offer in union negotiations or recruiting conversations. And in some unionized blue-collar industries, the linkage at least made a modicum of sense; if your job at the steel mill damages your health, there is some logic in the company covering the costs.

It's also true that a healthy work force is a positive thing for any employer. And to the extent that the economic system was built around big companies providing cradle-to-grave care of all kinds for lifelong employees (something that now sounds like it comes out of a Chinese communist handbook, but never mind), the connection between health insurance and employment is not totally arbitrary.

But in today's economy, the concept of the paternalistic employer is obviously outdated. We are all encouraged not to count on the company, to stay mobile and flexible, to start our own businesses, to be our own brands. So why the vestigial legacy of employee-provided health care, which severely inhibits the flexibility and mobility of the work force?

As the employer/health-insurance provider, I not only have to pay half the cost, I also have to field the complaints when the insurance company screws up. I have to deal with the administrative aspects of the plan. I have to negotiate with the insurance company over coverage of out-of-state employees. In short, I have to devote substantial company resources to something that fundamentally has nothing to do with the business of the company.

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