The Politics Of It, Ctd

by Patrick Appel

A reader writes:

Patrick says:

Even though delinking [insurance] coverage and employment would be offset by higher wages, there would be a lag between ending employer benefits and wage increases. And Americans do not typically understand the that benefits come out of wages. The public would react like a massive financial burden had been created regardless of reality.

The obvious move then is to mandate full disclosure of employer paid benefits. Declare that paystubs and W-2's must provide the full detail of the costs of all benefits, the amount paid by the employer and the amount paid by employee. The totals are added to the wage totals to reflect total compensation. After the population has digested that information, then we can move forward to transitioning health care expenses away from the employers. Something so simple as telling the truth can solve many problems.

Another reader points out the problems with ending employer health care in the current economic environment:

My current employer, like many corporations, isn't having a record year for revenue or earnings and our executive management is under a lot of pressure from Wall Street to get our numbers up. If the health care market shifted to where they could drop all insurance for employees, I guarantee we'd see at best a small fraction of those expenses added to our paychecks and the bulk of it would go towards improving the company's bottom line, not my personal income. While this might be a boon for a lot of struggling companies, I see no way in which it wouldn't shaft the vast majority of current workers whose health care is employer-provided.

He continues:

Yes, there would be increased pressure over the long term to reduce both cost and cost growth, but the initial disruption would be huge. I've yet to see any economist deal with this issue in a rigorous fashion, and too many of the pundits commenting on the correlation seem to make the incorrect assumption that *every* dollar currently being spent by employers on health insurance would be converted to wages.