This question is framed in terms of employer sponsored health care benefits, but it really applies to any employer/employee interaction. Are you working with your employer, or are you competing with your employer? To put it another way, is your employer working with you, or simply working you?
I ask this because in the health care debate there are two groups of people who have opposing views on this. One group argues that employer sponsored health care as the dominant source of health insurance coverage is destructive because it distorts the health insurance market by locking people into few if any options for insurance and locks them out of the economic decisions about what plans they want. They also argue that everything your employer spends sponsoring health care coverage is money out of the employees paycheck. The other group argues that employer sponsored health care is a good thing because that is the only way most people can afford coverage and if the employer were to drop coverage the money they save would not go back into paychecks, but would simply pad their bottom line.
The second group obviously views the employer and employee as competitors. These are the people who favor unions because the employee’s need to band together in order to stand up to their employers. This adversarial relationship dampens production and hampers progress. Before anyone gets too upset with this analysis let me just say that there have been situations where unions were necessary but they are no panacea.
Let me explain why I think the first perspective is more accurate based on my own experience.
I have worked for a number of employers ranging from large (tens of thousands of employees) to small (three employees). In almost every situation I have had the opportunity to know and work with whoever was making decisions regarding employee benefits (benefit administrators in large companies, owners of the small companies). Without exception, those making the decisions about pay and benefits have desired to pay as much as they could afford without risking the financial well-being of the business and to offer the best benefits they could afford as well.
In the worst case they desire this simply because they have to compete with other companies to hire and retain the best workforce they can get. (Obviously in a down economy the less altruistic employers can skimp on pay and/or benefits.) More importantly however, every employer I have worked with has had a desire to treat their employees well in pay and benefits simply because they are decent people and they value their employees. (This desire is unhampered in down economies even if the ability to make good on it is.)
Despite the beliefs of those who view employment as an adversarial relationship, a free market has natural impediments to real employee abuse so long as there is no illegal or unethical behavior on the part of employers generally. If you want to see an example of how the two relationships differ watch or read Elizabeth Gaskell’s North and South and pay attention to the interaction between John Thornton and Nicholas Higgins.
There are employers who think they are at odds with employees just as there are employees who think they are at odds with employers. The truth is that most employers want to provide a good work situation.
“One group argues that employer sponsored health care as the dominant source of health insurance coverage is destructive because it distorts the health insurance market by locking people into few if any options for insurance and locks them out of the economic decisions about what plans they want.”
“The other group argues that employer sponsored health care is a good thing because that is the only way most people can afford coverage and if the employer were to drop coverage the money they save would not go back into paychecks, but would simply pad their bottom line.”
These 2 lines of thought are not mutually exclusive. Both are true.
Taking on some big questions here David. I am probably not in either of your camps on this one. I don’t believe the issues you raise “locking people into few if any options for insurance and locks them out of the economic decisions about what plans they want” are really important to most people. I find that most people are concerned about choices of provider, not choices of insurance. Insurance options offered by an employer or available in the open market may restrict provider choice, but that is an undesired feature of the product, not an option people are seeking.
In the second instance, if I am making a health insurance decision based on economics, then keeping the price as low as possible relative to the benefit provided is always the preferred situation. The fact that employers contribute to premiums and, in some cases, have bulk purchase discounts will always bend the economic decision toward employer-based insurance. If one makes the assumption that every rational person would like to be able to get the health care they and their family need without having to worry about financial disaster, and if we assume that health care costs will not go down because employers are not paying a part of the premiums, then there is no real case for moving to an individual market.
I dislike employer-based insurance however because it disappears with employment, and with very few exceptions, most workers in the U.S. are employed at will and cannot have any real long-term security regarding their health coverage. I too have had a long involvement with employee benefits people in the course of my work (HR systems) and I agree with your assessment in general. As you say this is an economic decision, a business decision made by people who usually want to do the right thing but are constrained by an obligation to maintain the financial stability and profitability of their enterprise.
American companies are now competing with companies in Europe and elsewhere that have no need to worry about health insurance for their employees. They don’t need to buy million-dollar software to manage the complexities of their cafeteria plans, they don’t have the legacy cost obligations to retirees, and they don’t have to deal with the complexities of the tax code for pre-tax vs. post-tax benefits. They and their employees pay a tax, or a nationally-set insurance premium to a private insurer and receive all the care they need without concern about the cost. Wouldn’t it be a boon to our economy for employers to be rid of these needless complexities and have a healthy workforce with less incentive toward adversarial attitudes toward their employers?
You are both right that the two positions I laid out are not mutually exclusive, nor is this a “there are two kinds of people in this world” situation. I was merely citing two positions that illustrate different perspectives on the employee/employer relationship.
Charles,
I was not trying to argue for or against employer provided health care benefits. One interesting thing about the foreign competition though is that foreign companies still factor in the costs of health insurance whether they pay them in premiums to private health insurance companies, premiums to government insurance companies, or government taxes. Whether we pay them in a private market or a public single payer system (or anything in between) the things that makes us less competitive is cost, not the way we pay the cost.
I do agree that the adversarial position is detrimental to production and economic stability.