Tag Archives: health care

The Birth Control Battle that Needn’t Be

10 Feb

There’s been a bit of an uproar, most prominently by Catholics, over “a new White House policy compelling Catholic institutions to cover contraception in health insurance plans”:

[The] dispute [was] spurred by a late January announcement by the Department of Health and Human Services that all employers, including Catholic hospitals and schools, will be required to offer free access to FDA-approved contraceptives like the birth control pill and Plan B (the so-called morning-after pill) through health insurance plans…  [CNN]

Many are claiming an intrusion on religious freedom, with Pittsburgh’s Bishop David Zubik dramatically stating:

The Obama administration was essentially saying “to hell with you,” particularly to the Catholic community by dismissing our beliefs, our religious freedom and our freedom of conscience.

 

There is obviously a lot to say from each side about this issue. But it really needn’t be an issue at all.

 

The root of this whole row is the fact that, unlike in other countries, the responsibility of providing health care often falls on one’s employer. And when your employer is the Church, or another body that opposes birth control, we can see the complications that arise when asked (or required) to provide controversial services like birth control.

Ask any group of health policy experts whether they would have put in place our employment-based health insurance system, had they had the luxury of designing our health system from scratch, the resounding answer most likely would be “No.” In fact, no other industrialized country has quite this arrangement. It is uniquely American in origin and in modus operandi.

Our employment-based system was not the product of a carefully designed health policy. It was a byproduct of evading wage controls during World War II. [NY Times]

And this issue isn’t the only one with our current health care system:

Most economists are persuaded by theory and evidence that, over the longer run, the contributions employers make toward the fringe benefits of their employees come out of the employees’ take-home pay. Economists think of employers as pickpockets, so to speak, who take a chunk of the employee’s total compensation and buy with it whatever fringe benefits they “give” their employees. That process blinds employees to the inroads that their health care makes into their families’ livelihood.

A second major shortcoming of employment-based health insurance is that it is only temporary. It is tied to a particular job in a particular company, and it is lost with that job. Nowhere else in the industrialized world does a family, already down on its luck over a job loss, also suffer the loss of its health insurance. It happens only in America, under employment-based insurance.

Finally, the group health-insurance premiums employers pay to private insurers are “experience rated” over that employer’s group of employees. This means that the group premium is based on the claims experience – that is, the health history — of just that small group of employees. [NY Times again]

Our nation is obviously in dire need of health care reform for more reasons than this. Unfortunately efforts so far have underwhelming and/or misguided. Ideally this reform would put  affordable health care within reach of all Americans.

The objective of current health reform efforts should not be to abolish the employment-based system to which so many Americans feel attached, brittle and expensive as that system may be. Instead, the aim should be to develop a robust, parallel system of fully portable insurance that individuals or families can purchase on their own, in a properly regulated and organized market, with public subsidies where deemed necessary. As my earlier posts to this blog sought to explain, this can be done in a variety of ways. [NY Times again]

And reform could well be a boon for economic/entrepreneurial growth:

The high costs of health care are:

Hurting U.S. competitiveness. Employers pay more than 50% of the costs of health care, hurting their competitive positions versus competitors from other countries. For example, General Motors’ costs are $1,000 more per car just due to the costs of health insurance.

Hurting job growth. Small companies are the engine for job growth, but because many small employers do not provide health insurance for their employees, employees are often reluctant to leave large firms and the benefits these firms provide. This could be remedied if tax laws were changed to treat employer-purchased health insurance (which today is a non-taxable company expense) the same as giving employees money to purchase their own insurance (which is treated as taxable income for the employee). [snippet from Harvard Business School]

In more detail:

Clearly, health care costs have reached levels that are adversely impacting entrepreneurial activity. One result of the spiraling expenses is the inability of new companies to offer health insurance to their employees. …

A second effect has been to lead many older small firms to reduce health care coverage. … Self-employed people are much less likely than other people to have health insurance. … Small businesses also pay more for health insurance than large companies. …

A third effect of the tremendous rise in health insurance costs over the last decade has been to impose a huge financial burden on new companies. …

Finally, because leaving a job to start a business causes one to give up employer health insurance, the employer-based health insurance system in this country is keeping some people from becoming entrepreneurs. [NY Times, different article]

 

Should health care in the US be properly reformed, this controversy would not be. Employees would be able to get health care some other way. Companies keep money for their business, no longer required to provide services they really shouldn’t have to in the first place (ditto for pensions, I suppose). And thus, the Catholic Church, as an employer, wouldn’t have to worry about indirectly supporting services they oppose, but which many see as essential.

 

More:

Kauffman-RAND Institute for Entrepreneurship Public Policy: Is Employer-Based Health Insurance A Barrier To Entrepreneurship?

American Journal of Public Health: Insights From Health Care in Germany; NPR: Most Patients Happy With German Health Care

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