I wish employers did not provide health insurance, even though I have a chronic medical condition. The choices of plans offered by companies is far, far smaller than the choices available to me on the open market. I don't want to have to find new health insurance if my employment situation changes, possibly leaving me with a gap in coverage. The expectation that employer-provided benefits are at no cost to the employee is a fallacy - if companies did not offer health care as a perk, they would be able to offer higher salaries instead.
The only reason American employers are in the business of offering health insurance is because they get a federal tax break. This makes health insurance cheaper to the employer than to individuals. Given this, if my employer stopped offering insurance, they couldn't increase my salary enough for me to purchase the same plan myself. I think this is unfair - I would like to get the same tax break myself, or at least eliminate the tax break altogether so I am on an even playing field with businesses. This would allow me to purchase my own health insurance at rates comparable to what I'm offered at work.
Considering the tax situation, it's curious that Intuit would not choose to take this tax break. It seems like a short term move that allows them to cut costs while exploiting the economic stickiness of employment. This move makes them less competitive for employees in the labor market, but that only affects them in the long term. In the short term, the employees they have will be hesistant and slow to find new jobs.
> if companies did not offer health care as a perk, they would be able to offer higher salaries instead.
Prices, including labor prices, are not determined by costs. There is no indication at all that companies would compensate employees more if they didn't have to pay for their health insurance. What is most likely to happen is that companies will pocket the difference, in the same way they've been pocketing the difference from increased productivity while letting wages become stagnant.
They probably would. I've had a lot of jobs that heavily emphasize how much is paid for benefits, and often it's used as justification for why raises weren't offered that year. These places would probably be happy to give everyone a raise and do away with the frustration with medical benefits, especially plans whose cost go up like 20% a year.
There are a lot of jobs which do not offer benefits, or benefits are offered with no part paid by the employer. These places would not offer raises, but these people would end up with better choices of private plans.
Benefits are a huge burden for companies, especially smaller ones. Coordinating benefits is a seasonal full-time job that someone has to do. I've known of a few smaller family businesses that gave everyone a raise, and told them to get their own health care coverage on healthcare.gov.
> They probably would. I've had a lot of jobs that heavily emphasize how much is paid for benefits, and often it's used as justification for why raises weren't offered that year.
Sounds like an excuse to me, and if they're this bitter about paying for benefits, something tells me they'd be just as bitter towards giving substantial raises across the board for, essentially, no reason.
Comments like this give the impression that there’s an assumption that business owners are all just swimming in money and not one or two bad months away from bankruptcy. Most businesses do not survive more than 5 years for a reason.
Businesses that cannot afford to retain talent and remain competitive deserve to not survive, in order to make room for more efficient organizations. This is a principle of the free market.
Also as a principle, regulating said free markets for QoL improvements (e.g. min wage, HI, disability, comp, soc sec, etc.) affect all participants - both efficient and destined-to-die businesses alike. If you can't exist through playing by the rules that everyone has set, why are you still in business?
Should they? Every business doesn’t have millions of dollars in cash to burn trying to find product market fit. Most start from nothing or personal savings, perhaps partially from the salary of a spouse.
When you start a business there’s an expectation that you’re probably not taking a paycheck from it for a few years while you try to attract customers to provide steady cash flow.
While doing this, you somehow have to find a way to hire people to help you grow.
If it doesn’t work out, the business owner loses everything most likely and will probably be on the hook for the space they were leasing.
Now if you survive and make it past all that, hopefully everything stabilizes and you’re able to run a successful business that can return more to you than you put in…but it’s hard. Very very hard.
This “should that business even exist” stuff comes from not having any idea how hard it really is and how much is really on the line or the ups and downs along the way (which are even harder when you’re trying to make payroll).
>> When you start a business there’s an expectation that you’re probably not taking a paycheck from it for a few years while you try to attract customers to provide steady cash flow.
>> While doing this, you somehow have to find a way to hire people to help you grow.
Where is that expectation coming from? It's fine if it's a side business you're looking to bootstrap or something, or if you have enough seed funding (which can be in the form of your own savings if you're okay risking that) to be revenue negative for a time, but if you have enough funding or revenue to consider hiring people, the first person you should be hiring is yourself.
>> If it doesn’t work out, the business owner loses everything most likely and will probably be on the hook for the space they were leasing.
This is why you create a -business-. A legal entity separate from yourself. An LLC at the minimum. So that your personal liability is (wait for it) limited. If you're doing a sole proprietorship or something, where you'd be on the hook for everything, WTF are you doing hiring people and signing leases?
All your theory is correct, but in practice it works in the opposite way.
Owners get pais last, not first. Sure you make enough income to pay yourself first, then you hire. Time passes, there's a bad month or 3, employees still get paid, owners start accumulating loan accounts.
LLC's and other structures are designed to limit downside, but some creditors will end-run this with personal sureties. This is really common with leases, but also other forms of credit. Inexperienced business owners may not push back against these as hard as they should (you can push back, but most starting out don't know that they can...)[1]
Building a business from scratch is hard work, and most fail within 5 years because failing is really really easy, and success requires someone to do a lot of different tasks well, and almost always some "luck" [2] as well.
[1] most bootstrappers try once, and are thus inexperienced. The folk they are dealing with (landlords and suppliers) are very experienced. This imbalance leads to contracts that are very often one sided.
[2] the best luck is advice from an experienced bootstrapper, ideally for free. They can help you avoid the most common mistakes. Of course you'll ignore some of their advice because "experience doesn't work like that".
> When you start a business there’s an expectation that you’re probably not taking a paycheck from it for a few years while you try to attract customers to provide steady cash flow.
I think this is only true for a newfangled SF business.
Traditional business gets a bank loan, has a business plan, and pays salaries from the start (including to the owner).
I would have said exactly the opposite. Newfangled SV businesses have all that investor cash to pay salaries, whereas bootstrapped need revenue, the sooner the better.
Make no mistake, the only reason a company closes is because they run out of cash. Old-style businesses have been doing that forever. SV businesses do the same when that "next round" fails.
Which leads me to conject that a VC business is just a bootstrapped business, where VCs are the customer...
Bingo. As someone who started a brick and mortar business that is tied to our home, the financial failure would have very real impacts on us, regardless of having an LLC.
> Businesses that cannot afford to retain talent and remain competitive deserve to not survive, in order to make room for more efficient organizations. This is a principle of the free market.
This assumes that such "more efficient organizations" can even exist. If they are possible, why aren't they already around? Are those "Businesses that cannot afford to retain talent and remain competitive" that you speak of somehow preventing them from existing?
Markets are zero sum. Competition ensures that an inefficient business will lose out to efficient competitors.
In most markets where efficiency is not achievable, then businesses are not entitled to exist. This is why things such as tax subsidies and other forms of funding are used to bootstrap new markets (e.g. green energy) that have a net social gain.
>"Businesses that cannot afford to retain talent and remain competitive deserve to not survive, in order to make room for more efficient organizations. "
Reads like maximalist statement with zero clues about the subject.
This is basic concept of the free market. it is valid to reject this concept. The free market is basically a religion in the US.
However if you reject this ideal which is the western worlds baseline, then you really have to provide some info on what framework you are arguing from…
Because "free market" does not exist. In "free market" you will end up with few majors owning everything else and controlling people's lives. We have various regulations that among the other protect small companies to a point and are trying to keep the huge ones in check. Things are slowly deteriorating lately in favor of big corps as they have government in their pockets but hopefully it is not yet irreversible. There is much more to discuss about "free market" and that naive "survival of the fittest" look at it but I am in no mood and am not qualified to write essays about the subject.
Which is why if you read the second part about my comment above, free markets are regulated. It's a no true scotsman to appeal to the purity of free market semantics when nobody else is using language limited to the literal definition.
It matters in the present context because we are talking about how employers would respond if employees didn’t expect health insurance as part of their job. If employers stopped paying health insurance, then it is extremely likely that they would not pass the savings on to employees, but to use it to maintain the business.
Clearly there are all manner of outcomes if employers stopped paying for health insurance. Generalising is fruitless.
Yes some companies will optimize for profit - some already do that, amazon makes a killing while warehouse staff are low paid. Uber makes everyone a contractor specifically to avoid benefits and so on.
Other companies pay a living wage, and cost a "cost to company" for each employee. These may choose to pay the benefit as cash.
Where I live the tax benefit of health care applies to companies and individuals alike. Some companies have mandatory health cover, others have optional health cover, others have no health cover. Since there is no tax implication it's not hard for prospective employees to compare one with another.
Ultimately, some companies pay low wages, some pay high wages, that's somewhat tangential to health cover or not.
Speculating on what most employers would "most likely do" is, well, just speculation[1]
[1] large companies like amazon known for screwing employees? Yeah, I'm with you there - but I don't think most employers are like that.
> Yeah, I'm with you there - but I don't think most employers are like that.
The leadership at my employer talks big about how much they care about their employees, and indeed, the vacation and benefits are very good. Yet even in the face of record profits they gave me a 1.5% raise this year, despite the 8.5% inflation. I'll believe that they'd pass benefits package savings onto me when I see it.
It's not out of bitterness. People don't necessarily realize that benefits are as expensive as they are, or that they had been increasing in cost so dramatically. It's more like, "sorry we aren't giving raises this year, but we are covering an added $400/mo in insurance costs for everyone."
A few years ago I sat in with a client on an 'employee meeting' where they discussed raises/insurance. No one had ANY clue what health insurance premiums were. The owner asked people what they thought it was per month. "$75? $99?" They went around the room. I said "$600". The whole room looked at me like I was nuts. The owner said "$560". Audible gasps around the room. People had literally no idea how much this stuff costs (this was... 5 years ago, IIRC).
I’m not really sure what that proves though. Each employee almost certainly saw the amount the employer was contributing when they selected their insurance plan. If they forgot that amount and later guessed a much lower amount, what does that demonstrate?
> Each employee almost certainly saw the amount the employer was contributing when they selected their insurance plan
I've never seen that happen, ever, in 25+ years of being in the working world in the US. Not saying it never happens, but I've not seen it, and after asking around, no one I know has seen that info.
For what it's worth, my employer does make a bit of a production about how much they pay for our insurance. They make us all look at a document that gives a figure that includes our salary and benefits, plus a breakdown. I guess the point is to make us more appreciative in the face of rising costs? That said, I don't remember the amounts being clear at the time I chose a plan, though maybe they were.
I mean - that sucks and all... but cost of living is constantly going up. If a company can't afford to continue operating with the costs of wages that company should shutter its doors - that's brutal but it's also how markets are supposed to respond.
In Australia minimum wage laws means that Starbucks locations rarely have more than two people on staff - that's just economic forces causing a rational business response.
Yours is a common belief, and I don't think you should be down voted for it, but you are wrong.
Firstly companies don't shutter, they downsize. The most vulnerable employees are the first to go, the higher paid ones are typically the most valuable, remain. Owners go last.
Secondly, in my experience, all employees would rather forgoe a raise and keep everyone employed that insist on a raise. We saw this first-hand in 2020. Lockdown brought extreme uncertainty but employees agreed to 50% [1] pay instead of massive job cuts.
Yes it helps that we pay staff well. Yes it helps that they get a bonus in the good years. Yes it helps that we have their interests at heart. Yes it helps that they are skilled and we don't want to lose them.
Yes, over the years some people have become redundant, but there are swings between good times and bad times, and no we don't shutter just because there's a bad time. That's explicitly _not_ how it is supposed to work.
[1] we had a min threshold for 50%, those under got 100%. Also thanks to govt assistance, and our ability to back-pay later, they all ended up "whole".
[2] ps - I agree on the need for a minimum wage. In almost all cases it is too low by a lot. And I agree that if you can't pay minimum wage, then you can't afford an employee.
The thing I specifically wanted to highlight (which I think most readers missed) was that not receiving a raise is equivalent to receiving a pay cut unless we're riding at 0% inflation. Every year costs go up for employees and keeping them pegged at the same salary prevents them from being able to cover those costs as efficiently.
I've seen workers pidgeon-holed into low stagnant wages too often to accept it as a status quo when the companies employing them are posting profits - in the modern world we too quickly accept the fact that owners are supposed to take out lion's share salaries and profits need to continuously increase. A business can have a healthy existence just making the economic wheels spin and ensuring that employees are well compensated.
We usually set minimum increases based on inflation. Often we do higher. Occasionally we have wage freezes but they are not common. We adapt to conditions and circumstances.
Obviously we are one data point, but I have seen other small companies do the same. Big companies bad behaviour does make the news, good behaviour does not, so while bad actors certainly exist, I don't know if that is the norm, and I don't know if it is more prevalent in the US.
I'm sorry, but my experience in work in many different segments shows the exact opposite to be true. Theres barely any company that takes "You can rise quickly thorough pay bands if you put in the effort", or "we would pay you more without benefits" seriously and is even being truthfully with you. I've had one company, the one where I'm at now, where I earn good money, get bonus and that bonus is determined by the companies performance. We had bonus when CEO etc. didnt get any because they messed up. We have great benefits (2 additional paid weeks of paternal leave, i.e.), but it's the exception to the rule.
Presumably in the idealized scenario ( where individuals purchased health plans themselves and not through their employer) the individual would get a tax break for the cost of their health insurance.
Man, it's almost like we just need some sort of mandatory group that everyone falls into, and then has to pay into. But, we could also provide some tax break, refund, or otherwise just not collect the fee, from, those who couldn't afford it.
If only someone had some sort of working template on how this could be done in a cost effective way. I'm sure everyone, regardless of where they fall on the political spectrum, would rally round such an obvious net good in that case.
(I know that bit of sarcasm is a bit of a tangent, it just feels like this whole subthread is missing the obvious)
The purpose of a business is to generate profit. Giving out goodwill raises goes against this fundamental purpose unless you need to retain SF tech talent to maintain the business. Businesses would continue to minimize their expenses, the largest of which is generally Human Resources. I disagree with your perspective.
This argument relies on a really weird assumption that companies aren't already compensating employees as little as they can get away with. That companies could compensate employees less by not offering benefits but choose not to out of the goodness of their heart.
If employers are already compensating employees as little as they can get away with then if they stopped compensating via insurance, they'd be required to compensate via salary.
Imagine a scenario where overnight, all US companies stop offering health insurance. In this scenario, all those employees who used to have health care would now have to pay for it themselves (or do without it). So they're all going to be expecting an immediate raise to compensate for this increased expense, and if not they'll almost certainly be looking for a new job that pays a lot more (after all, it's not like they need their old job for the insurance any more..)
If you're a company, unless you were already planning to do some mass layoffs, you're going to give most of them that raise because the alternative is having a bunch of people quit. And if you don't increase your offers for new hires, you probably won't be hiring anyone either.
> If you're a company, unless you were already planning to do some mass layoffs, you're going to give most of them that raise because the alternative is having a bunch of people quit. And if you don't increase your offers for new hires, you probably won't be hiring anyone either.
This is the problem with a lot of "econ 101" stuff, it makes these big sweeping assumptions like "markets are price-efficient and operate at market-clearance prices" and after spending econ 101 building it all up, econ 102 and 200 and etc etc will spend semesters telling you why it's all crap.
Markets are not price-efficient, real-world prices are very sticky, and that includes the price of labor (actually labor tends to be far stickier than most other products). For example, vanishingly few real-world employers are going to offer automatic raises to cover cost-of-inflation, which is the same mechanism that you would be relying on to increase wages after removing health-care benefits.
A lot of people in retail/food are still making the same $11 or $12 they were hired on at, despite much higher salaries often being paid to new hires (guess the efficient market hypothesis says their on-the-job experience has... negative value?).
Tech is its own little thing, competition for tech labor is much much tighter, of course, but that much is obvious. In the real world, you can already see that labor prices are very very sticky and owners will almost never choose to pass these savings along.
It also, to the grandparent's point, would not really necessitate anyone spending anything differently. The amount employers pay to private healthcare plans instead becomes a corporate tax; the amount individuals pay to private healthcare plans instead becomes an individual tax. But just by dint of it all going to the same pool, which now covers everyone, gives such massive pricing power that all those "$64 for an aspirin" BS charges will be cut to be in line with, yeah, any other country.
Universal healthcare funded via taxes is the exact opposite of insurance. Insurance premiums are decided upon your medical profile and risk. Taxes are based upon income, which has nothing to do with health.
Perhaps insurance companies would have to start competing for the business of individuals and families, and... perhaps that competition should drive down the price some, so they could get our business? (ha ha ha, of course, not going to happen).
The reason why that won't happen spontaneously is that the employer purchased health insurance subsidy amounts to something like $273 billion per year (as of 2019). Employees would have to pay a comparable amount in additional income taxes to purchase comparable health insurance for themselves.
> Employees would have to pay a comparable amount in additional income taxes to purchase comparable health insurance for themselves.
This is false: they would pay a lost less in additional income taxes. Americans overpay for the same services as every other developed country. They are being fleeced.
Labor price is salary + benefit packages. Reducing the cost of benefits from the equation would mean the company has extra resources.
The company could:
* immediately raise people's salaries
* or hire in more people (which increases demand)
* they could take the extra profit and distribute that to shareholders
* or drop the price of their products and services and pass the savings on to the customer
* or they could make capital investments.
In most cases, I would expect salary prices to increase for labor (even if not immediately) or make people's current salaries more effective in purchasing power.
Most employers did it for decades before they were legally required to. The tax benefit to having your employer purchase your healthcare has been substantial since about World War II and such plans have been commonplace ever since, outside of unusually small employers or employees who are marginally paid.
> Most employers did it for decades before they were legally required to.
They also had pension plans, but these days, those are rare outside of government jobs. I wouldn't be surprised if companies clawed them back as the threat from unions dwindled.
United Airlines declared bankruptcy to get out of paying into a pension plan after not paying the proper amount into them for year so they could appear to be more profitable.
A 401k is probably better since the company is paying funds directly to your account, IOW they can't underfund it.
That said, Raytheon ended up fucking over their 401k plan. Raytheon matched in company stock and required that 401k owners held the company stock for 3 years once it was put into the plan. It worked great until 2005 when Raytheon's stock dropped to 1/3 of the price on news of gross of mismanagement. Employees couldn't get out of the stock, and were forced to swallow the loss.
While I will be the recipient of a decent pension that probably wasn't really on my radar early-ish career, defined benefit private pensions are not really great overall.
They tend to reward long tenures at companies. Even with government sort-of guarantees they have risk of insolvency. And ultimately it's just not your money.
Most employers provide far more than the minimum required health insurance.
Also the penalty for large employers is much smaller than the cost of health insurance (50% to 18% depending on individual vs group coverage), assuming that if companies didn't provide health insurance they'd pocket the difference means companies should still pay the fine.
Ok. Why do they offer health insurance plans beyond the minimum? Why do they pay above minimum wage? Why do they offer beyond minimum PTO? Equity options?
You're worrying overmuch about "the market". The US health care system is pretend free market. The government is paying for much of US health costs, and regulating various aspects of it.
What really matters is how the government policies would change when it's moved from employers to people. The government is likely to pay the costs for low income people, which will also mean their wages are likely not to rise.
Companies would "pocket" the difference? What pocket would that be exactly? Companies are in competition. While company A, might "pocket" the savings, company B will use it to their advantage in potentially any number of ways - paying employees more, reducing prices to customers, investing in new equipment. You refer to the 8 million companies in the US as if they're one entity that conspires in lockstep. That's not how it works.
The philosophy of minimizing benefits to maximize salary is the one espoused by Amazon. It isn’t a hypothetical, it’s used by one of the most successful businesses on the face of the earth.
Collusion is the antithesis of competition. And it's illegal, hence the litigation. I am referring to the behavior of a free market, not an illegally fixed one.
A 100% competitive free market is the analogue to a frictionless vacuum in physics. It's a convenient model for academic purposes, but it's not something that really exists.
There is no such thing as a free market. A free market is a spherical cow in a vacuum. Corporations are generally far more informed of the nature of labor markets than labor itself a don't risk an equivalent of getting a life-threatening condition while having no health care. Corporations also collude, whether directly or indirectly, in many fronts.
In the grand scheme of things, in long-term timeframes, with huge error bars. Those error bars are big enough and the timeframes weird enough that it's not sufficiently useful even for entire industries over very human timeframes.
It's incredibly useful. Open up The Wall Street Journal and look at oil futures or go for a drive and look at the price of gasoline. Watch a demand shock (like a pandemic) drive the price down. Watch a supply shock (war with Russia) drive it up. Or go over to the Federal Reserve website and look at the size of the money supply and how it's growing, and then go to the store and see this drive inflation, or go on vacation and do some foreign exchange.
And yet totally insufficient to describe many things that happen in markets, insufficient to explain the nature of economic crises, weirdness in niche markets of all sorts, the behavior of money, and a long list of etceteras that continue to baffle experts that have dedicated their entire lives to it.
> There is no indication at all that companies would compensate employees more if they didn't have to pay for their health insurance.
Employers use a figure called "total compensation" for what it costs them to employ someone. This includes salary and the cost of all the benefits, including all the so-called "employer paid" taxes and benefits. The WSJ ran an article long ago that showed employee productivity matched total compensation, not salary compensation.
Employers certainly do care about the cost. They don't care what percentage of those costs go to employee takehome pay. But offering pre-tax health insurance means the employer can offer less total compensation.
Any economic article that talks about salary instead of total compensation is either ignorant of accounting reality or is trying to mislead.
Companies are paying the increase in productivity to the professional-managerial employees who are actually more productive because of technology, scale, etc. and not to the masses whose productivity is the same as ever.
Even when we talk about redistributing this increase, we mostly talk about redistributing it from the professional-managerial employees, who populate the higher personal income tax brackets, not from the companies themselves (corporate tax) or their owners (wealth tax). If you are right that companies and their owners are pocketing it, then we are looking for it in the wrong places. But it seems like it really is largely going to the PMC.
That's fine, the idea isn't to get rid of employer provided healthcare to make salaries go up, the idea is to get rid of employer provided healthcare because of the problems that come with it.
Take a look at the individual market and what is offered on it. If you want a comparable plan to an employer's group policy, you will be paying close to a grand a month in premiums for just yourself alone, and you will have yearly deductibles to the tune of thousands (sometimes tens of thousands for a family) dollars.
Without increases in compensation, workers will suddenly have thousands of dollars in new yearly expenses just to maintain coverage, and many will be forced to go without coverage at all.
This wouldn't be a problem, though, if employer-provided healthcare was replaced with a universal healthcare system that most first world nations have had for ages.
So do you think replacing the insurance market is more or less likely when people think the 25% of their premiums that they pay are what their insurance costs?
I have pretty good insurance, when I started, a few weeks before the end of a year, some of the folks I was working with were bitching about how it didn't cover anything and was expensive (the employee premiums were tiny at the time and are still low).
Health insurance is a budgeted overhead variable cost assigned to employee expenses. It's true that should HI disappear, not all of the HI cost will be transferred to employee salaries, but it's definitely a non-zero amount.
And, I think, over time we'd see more and more of that HI cost be transferred to employee salaries. Supply and demand is often taught in classes as "If this bar shifts here the economically efficient price point shifts over to here" - the portion that ends up frequently omitted is that that shift takes time. It's why some taxes are leveraged on employers and some on employees - in the end the net result is the same, but we can end up enjoying decades of beneficial inefficiencies while the market works to respond to the shift.
Yes, if HI becomes universal healthcare in the U.S., like most developed nations, then funding will be through a variety of means, inevitably involving income tax.
That said, depending on the splits, it's much more probable that the cost to "employee salaries" will be less than their typical OOP expenses anyways.
The companies compete for workers, especially highly skilled ones. One company rising wages would push others to react in a similar way assuming they compete for the same talent.
And yet wages for highly skilled workers haven't kept up with productivity increases, cost of living increases and inflation in many parts of the country, including areas like SF or NYC where you find some of the highest paid workers.
Productivity increases create less demand for labor, so you would expect the demand for labor to drop. If two workers now can do the job of four people five years ago, it doesn't mean the two workers get paid double.
Somewhat and I think highly skilled workers actually "suffer" from the worst relative compensation. Most legitimate 10x-ish developers don't make 10x what their coworkers are making, they end up producing significantly more value for the company then they're costing with the excess value going to profits and subsidizing other employees.
I personally think a model like this is pretty fair, if somebody is making 50k a year then pulling in 1M annual is pretty silly - but it makes sense to account for that difference with taxation rather than the arbitrary choices of private employers.
Yes. As someone with a chronic health condition living in America, I agree completely.
Leaders of this country really do not care about the healthcare of its citizens (just look how long people with diabetes have been screwed, how long people have been able to lose literally everything over medical debt, etc.), I can’t imagine leaving things to the individual would be helpful in any manner whatsoever.
Budgets are set by costs. When you run a business, you care about the “fully burdened” cost of each employee, and you hire as many as you can within your budget. One of the line items in that is my half of the payroll tax. Another line item is health insurance. Another may be an offset for office space and equipment.
Whether my fully burdened cost budget has a line item for health insurance being paid to a 3rd party or to the employee is totally irrelevant. Tax law currently happens to make it much more efficient for me to pay that money to a 3rd party, so that’s where it goes.
The reason I have that line item is due to a combination of market forces and regulation. By no means do I get to choose just not to pay it, if I expect employees to keep working for me, or the government not to shut me down.
> and you hire as many as you can within your budget
If you believe this then what's your explanation for why Google hires a smaller number of expensive engineers, rather than a larger number of cheaper engineers? They could hire 10x if they went for only lower-tier college new-grads!
> The choices of plans offered by companies is far, far smaller than the choices available to me on the open market.
Maybe I wasn't searching correctly, but I was recently discussing healthcare and taxes with someone and briefly searched on the Healthcare.gov exchange to look at prices. There were only three PPO plans (where you can freely go to any doctor in network), and all three were HDHPs, all from the same company. There were many HMO plans, some HDHP and others with low deductibles, but often extremely small local networks and limited choice of both PCPs and specialists.
> This makes health insurance cheaper to the employer than to individuals.
One other thing to note in your analysis is that most large employers are not buying any insurance, but actually self-insuring (funding the claims out of their own pool of money). So the employers are actually acting as insurance companies for their workers, rather than simply buying and reselling commercial insurance.
There would be additional considerations beyond taxes in analyzing whether this type of insurance is more economically optimal, for example, the fact that each company has a distinct risk pool which may not be similar to the general population, depending on the company.
This was my experience, as well, with the individual market. It is virtually impossible to replicate an employer-provided plan at all with market plans. You, as an individual, do not have the leverage to buy what most would consider good health insurance plans on your own.
Are you in a state that has pushed back against ACA? Or maybe you're only looking at the "bronze" tier, which will be skewed towards low cost HMOs and HDHPs?
FWIW, in California I see like 5 different options for HMO across all of the tiers, a couple are local ones I've never heard of, but there's also some like Kaiser that are fairly large networks.
I'm in a state that championed the ACA, and there are dozens of plans available on the individual market, but none of them are very good. There are plans from large insurers for large networks, but those plans are much worse than any group policy plans employers can buy from the same exact insurers. And it gets even worse if you want to buy a market plan that covers your family.
This is for Orange County, NC, which has not expanded Medicaid but is using the regular federal ACA marketplace. There are definitely a lot of low cost/quality HMOs at the Bronze level, but across all tiers there are 63 HMOs, 3 PPOs, and 10 Point of Service (POS), a term I hadn't heard previously.
For comparison, I am on my mom's insurance from Belk Stores which is self-insured, offering three different HDHP PPO plans with a pretty good network and a range of deductibles within the HDHP window. Premiums are pretty bad. My dad worked for a SP500 semiconductor company before retiring, about five years ago they switched to HDHP-only, which just two options both at the higher end of the HDHP range. Premiums were better, but actual coverage not much better.
> The only reason American employers are in the business of offering health insurance is because they get a federal tax break
The cost of paying me is also tax deductible, so they get a 'tax break' by paying me more money.
> This makes health insurance cheaper to the employer than to individuals.
I don't think that's the root. Large insurance companies seem to want to sell to larger companies - groups of people - vs selling insurance to individuals. Selling to a group is where it seems some price reduction happens. And... by and larger, if you're selling insurance to people who are already healthy enough to be working regularly/fulltime, your costs for insuring that 'pool' will be somewhat cheaper than the costs of insuring any random individual.
> they couldn't increase my salary enough for me to purchase the same plan myself
If the cost of my health insurance was deductible from my individual taxes, then the entire market would be turned upside down. There are certain thresholds that need to be met re MAGI (IIRC) before health insurance insurance premiums are deductible by individuals. I'm "self employed" so the entirety of my premiums are tax deductible, but for the average person working a W2 job someplace that doesn't provide health insurance for them, it's not a deductible expense, which is a total sham.
I am increasingly disabled, but I'm still managing to keep my job and its amazing health insurance, thank God.
Insurance this past year has paid for like, a couple dozen specialist visits, 6 MRIs, weekly rehab, a reclining desk and a power wheelchair. I maxed out my deductable in February :D
My health would be better if I could go on disability but that pays like, $1K a month and is ridiculously hard to get.
It's a tax break for the employee and hence for the employer - they can spend $X on insurance and give the employee $x+tax rate in benefits.
What should be done is entirely decouple it so that health insurance AND medical expenses are above the line deductible - or make none of it such. And then let employees pick whatever they want.
But why do you have to think about this at all? Wouldn't it just be easier that this was provided by the state, so that all citizens could afford getting necessary health care. At the same time it would relive you of having to compare coverage, copays, deductibles or in general understand the full fine print of your insurance agreements. Most comparable industrial countries have found a pretty decent solution to this where you move the financial burden of many basic services (health care, schooling, etc.) from the public, over to the government - allowing all citizens to benefit from these, without having to wonder if the can afford it.
I am not sure if its a justifiable comparison, typically you don't end up with a food costs in the hundres of thousands or millions in the blink of second. It's not like you all of a sudden get a bill from Mickey D for someone showing a truckload of hamburgers down your throat.
I am not completely sure where you want to go with this argument. But as a Scandinavian I am very much comfortable with the state ensuring my access to health care, knowing I do not ever have to ever have to think about medical costs, health insurance or access to one of the better health care systems in the world for me or my family. We could very much bear the costs of having private health insurance, but its just one less (big) worry...
I do think that production of food is very much a state matter - and unless you knew taxes in the US today go towards ensuring safe and predictable production of food through i.e. agricultural subsidies. I would expect the state to ensure that the country have a viable and thorough plan to ensure food supplies.
Food production is heavily subsidized in the US because a free market would wipe out producers the second market conditions impact their profitability.
Wouldn't it be easier if we all jumped into the vat of jelly with the matrix connection jacked into the back of our necks!? We wouldn't have to eat or poop or sleep. We could just trust the powerful to make every decision for us. It would be soooo much easier.
Forgive me, but when it comes to my healthcare I want the most choice and control as I can have. I don't want to be stuck with whatever some bureaucrat decides is worth it.
Lastly, people make stupid decisions and they get hurt. They go rock climbing or skydiving, they ride their bikes on busy streets. Why should I shoulder the responsibility for people's poor life choices.
So you're planning on paying for all of your health care out of pocket, then, since an insurance plan is right out if you don't want to help collectively shoulder the risk? I hope you've done extraordinarily well for yourself, in case you get sick.
Personally I haven't done that well and could not afford my costs if they weren't pooled with other people. I'm happy that in my case this is publicly funded, so I don't have to deal with profit-maximizing private insurance companies who are at every turn actively trying to find reasons not to cover me.
I'm also glad that people where I'm from who are less fortunate than me don't have to go without needed health care because they aren't able to get good enough jobs. In fact, I care much more about the latter than you or me being able to choose between a bunch of options. And if you're doing so well and that's what you want, private health care is typically still an option even in countries with publicly funded systems.
Oh well, too bad you still have to pay for those accidents through your insurance premium - thats how it works. The only difference is that you either pay it over tax or via a private business that will try everything to wiggle out of paying for your injuries.
How much choice and control do you really have by having a private insurance? If you get hit by a car on the street, your kid trips in the stairs, you walk into a wall and crack a rib, the difference between your and mine is that:
1) I don't have to think about what it will cost me
2) I don't have to fully understand every aspect of my insurance agreement in order to understand what I am entitled to
3) I don't have to fight a insurance company if they don't want to pay for it
4) I can just relax, have a beer, and know that I will be taken care of if something happens
> Why should I shoulder the responsibility for people's poor life choices.
You do know how private insurance works right?
Someone makes an insurance company. Then they sit down and figure out the probabilities of things happening to people. They then put a price to join the group. They then divvy up that money to people in the group that have had things happen to them.
With insurance you will always be paying for other peoples "poor life choices"... that's the way it works. Maybe one day it will be your poor life choice (or accident.)
Having state healthcare by default does not necessarily mean a ban on private healthcare. Both can coexist.
Like being born with a certain combination of genes which aren't as healthy a combination as others. Or being hit by a car, and losing a limb. Or being shot in the head by someone and persisting in a vegetative state for years.
Yeah, the nerve of these freeloaders and their 'poor life choices'.
The rest of the world needs a country to send all the crazy asshole libertarians to. America has gracefully accepted that burden as this commenter points out.
The amount of time we have to spend each year sorting out our healthcare for the entire company is mind blowing. You are totally correct, it becomes a full time job for 3 or 4 weeks for myself and another partner. So much effort and knowledge required for something that isn’t even our core business! And it inevitably causes drama with employees who don’t like some part of the group plans we end up with. Very stressful.
We only offer it as our employees all say that this benefit is really important to them. I didn’t know it was a tax break for us to be honest.
I wish more employees thought like you did. Our average monthly cost per employee is about $500 for a “silver” PPO plan, and about $110 for dental. Average age of our employees is below 30.
I’d gladly pay employees the $610 extra a month just so we don’t have to deal with it and the drama that comes with it. This would actually save us money from the energy wasted dealing with insurance companies. And no one who’s dealt with our insurance plans over the years has had a positive experience. My brother (who worked for my company) cut his chin while out of state. Required 2 stitches, and he just walked to the closest ER to get them. $3500 it ended up costing him, even with our insurance and countless hours fighting the insurance companies too. Didn’t even see a doctor, a nurse did the stitches. It’s a joke.
Other than salaries, health insurance is the largest expense for our business. Think about that at the scale of the entire economy and its mind blowing the wasted energy/effort on this “system”.
I’m originally from Australia. We have “socialized” healthcare there. My brother is back visiting family currently and got an x-ray and ultra sound for $310. The American system is absolutely embarrassing.
Why is this? (I'm used to European 'socialized' healthcare). Is it just the amount and type of cover offered by different policies is wide and opaque, the age/health of the employees effects the price/cover?
Aren't there insurance brokers that provide tools to compare simply. Would a system that allowed employees to vote/order the cover they would like in the plan and then you to adjust the price point until you get matching policies that provides an acceptable level of cover.
Each insurance company offers a myriad of different policies, and they change a little bit every year.
Brokers will educate you on specific plan mechanics but will avoid explicit recommendations because they don’t want to take blame for choosing the “wrong plans” for a company.
Each plan is optimized for specific scenarios, e.g. young person with no medical risks or chronic conditions, middle aged person with chronic conditions and established doctor affiliations, so on and so forth. But they aren’t explicitly labeled that way, so people have to figure out what makes sense for them.
If you’re an employer who cares a lot about this process, you basically need to mind read the healthcare needs of each of your employees and offer a menu of options that satisfies their needs, while trying to avoid offering options that nobody should rationally choose.
If you know nothing about health insurance it makes the whole process much harder.
Source: worked in American health insurance for years.
Never underestimate the evil of HR. It’s a way to offload headcount without a layoff.
They probably agreed to not layoff Mailchimp employees in the sale, so they make them quit. Purging the sick, tbe pregnant, etc from the company is a way to cut costs, and doing so through some elaborate bureaucratic fuckup avoids government intervention.
> I wish employers did not provide health insurance, even though I have a chronic medical condition.
I've had multiple open heart surgeries. My medical events are relatively rare (every couple years) and I recently went completely septic for 4 days (started to have multiple organ failure ~3 days from no-return) due to a cascade of underlying issues. I know my medical coverage and it's been critical to my survival for my entire life.
I have NEVER used employer health insurance and anyone with major medical conditions would be foolish to depend on employer coverage in most cases. The offered plans are basically a big deductible with some minor coverage for non-catastrophic, no surgical coverage, nothing chronic. More expensive plans cover more dependents. Gee thx. It's all but useless and I have simply declined it everywhere for the last 25 years to keep the ~25$/mo, as I have paid my own (car payment-sized) platinum level health insurance plan everywhere I've gone (and my wife's). The type of company - Finance, Medical, Marketing, Retail, Consulting (ironically the best I've found), doesn't make much of a difference. Every now and then you find some employer that will "cover your healthcare 100%" which is inevitably code for "cover the plans we choose, which aren't different than anyone else".
My health insurance costs me $0 (fully employer paid), has a $300 deductible, and a $3k annual maximum. Last year they covered more than $100k worth of expenses without even a small amount of fight.
This is a similar plan to my last 3 employers, companies of various sizes HQd in either SF or Seattle. If I had "multiple open heart surgeries," it would cost me a max of $3k in a calendar year.
Where are you working that you are not being provided similar plans?
And... when you stop working and need $100k+ of medical expenses per year... ?
You're in a very fortunate position, but still dependent on the largesse and good fortunes of an employer (or multiple over the years), and when they have no use for your services, you'll be in the same boat as many others.
What does that have to do with the post I was responding to? I was stating that typical employer-provided healthcare in my experience is very good. They said:
> I have NEVER used employer health insurance and anyone with major medical conditions would be foolish to depend on employer coverage in most cases. The offered plans are basically a big deductible with some minor coverage for non-catastrophic, no surgical coverage, nothing chronic
Which is just completely untrue unless the best employer you've been with is a regional fast food joint.
1. You can get some of the tax break if you use HDHP plan + HSA. It's limited to about 7K though, because if everybody would take big tax breaks, who'd pay for those trillion dollar bills they're passing every year now?
2. US healthcare system is incredibly hostile to people trying to pay their own costs and designed to be maximally obscure and confusing. Imagine buying a car where your car dealer, tire manufacturer, window glass manufacturer and upholstery supplier bill you separately. Now imagine when you come to the dealer and ask how much the car would cost, they shrug and tell you you'd know when the bills come, just relax and sign on the dotted line. If you really insist, they could give you an estimate - something between 1K and 100K dollars - but they don't guarantee anything, it's just an estimate. And no, you can't choose the suppliers upfront or know which ones they'd use - this you'd also know only when the bills come. And no, there's no way to know when or how it happens - they bills would just show up one day as a surprise. Sounds like a nice experience? That's how the healthcare system works, day to day.
3. The frustrating part is that most of the people think it's the only way to manage it, and those that don't think that the only way to fix it is to nationalize the whole thing. I mean we can create insanely complex supply chains (think how many people cooperated on making a car? And you still can come to a single place and pay for it with a simple transaction at cost known in advance - magic!) - but somehow healthcare is where it all disappears and figuring out the separation of labor thing becomes the problem of the end user.
I was under the impression (from being on the public market and later self-employed, company subsidized insurance which is altogether cheaper and better) that companies have pooling power which allows them to cut deals with insurers. Is that not the case?
There are two kinds of costs with health insurance for companies. The funding to pay claims and the administration of said funding to pay claims. The administration part is the money maker, and while ACA attempted to curtail what they can charge for this/profit from it, they do creative things like "outsource" IT or HR to a separate company (with the executives as ovepaid board members). It's kind of like tax evasion only instead of taxes it's reducing your premiums.
> they do creative things like "outsource" IT or HR to a separate company (with the executives as ovepaid board members)
Source?
I am seeing 10-K reports showing UHC, Anthem, CVS, Cigna, Humana, Molina, Centene, etc all with profit margins ~5% or less.
Is the claim that executives at one or more of these companies is attempting to bypass ACA regulations (and violating fiduciary duties to their own employer) by overpaying for services to outside entities that the aforementioned executives control?
It's real. You won't see this on the 10-K, you need to look at the 990s (which tend to be hard to find). Here's Blue Cross Blue Shield Association from 2017: https://projects.propublica.org/nonprofits/organizations/135..., under part 7, independent contractors, you see "HEALTH INTELLIGENCE CO LLC". This is Blue Health Intelligence (as in Blue Cross Blue Shield Intelligence): https://bluehealthintelligence.com/. Their board is made up of a bunch of blue cross execs.
They spent 20+ million with this company, how much do you think the execs on the board get paid? No one knows because they're private/for profit and don't have to publish annoying things like a 990.
Many large companies also self-insure to pay claims, and only pay the insurance company to administrate the plan. That makes the effective cost much lower (well, in relative terms anyway...health insurance in the US is broken.)
The only reason American employers are in the business of offering health insurance is because they get a federal tax break. This makes health insurance cheaper to the employer than to individuals
This is wrong on so many levels.
First, employers get a tax break because compensation expenses are generally deductible as "ordinary and necessary business expenses" required for the employer to be competitive in the labor market.
Second, employer policies are cheaper because the risk pool is cheaper to insure than the individual pool, so the insurers can make the same or more profits despite charging lower premiums.
The combined effect is to make employer-based health insurer significantly cheaper on both a pre-tax and post-tax basis than individual plans. But even without the tax benefit employers would still be incentivized to provide health benefits in a labor-competitive market. For example, many still provide free meals and parties to employees, even though meals are only partially deductible and parties are not deductible at all.
I don't know the US system at all, but here in France employee health insurance ("mutuelle") are mandatory. The main benefit is that the cost is the same for all employees, no matter their health condition, age, etc. Basically it's a solidarity thing which allows everyone in the company to be covered well for a reasonable price.
Last US company I worked for, before the current one, instituted tiered policy costs. I made more, so I paid more for identical coverage. I thought it was good. They had pretty decent insurance.
There are a number of other western countries that have private healthcare systems. The difference between their and ours is tight regulation and cost controls, often combined with a robust public option for the unemployed to fall back on.
I should add that in France, you can keep your employer health insurance for free for one full year, in many cases when you lose your job which limit the risk of a "hole" in the health coverage.
France has private supplementary insurance programs in addition to the state run health insurance program.
A good corollary in the US is Medicare: everybody over 65 can enroll in Medicare Part A for free, but you can also choose Part B, Part D, and "medigap" coverage, each of which is optional and has a monthly premium.
There is also another differentiator - companies buy insurance for all employees (i.e. in "bulk") when if everyone were to buy it privately, insurance companies will have to sell it in "retail". As is always the case with any business - bulk customers have preferential treatment, lower prices, better terms, you name it. Retail always pays it in full. While current employer based insurance model is broken, I don't think goin "full retail" will change the situation much. We'll end up in a situation similar to wireless service market - 3 major players with overpriced plans and lots of cheap MVNOs that stop having any coverage 5 miles down the highway.
> I would like to get the same tax break myself, or at least eliminate the tax break altogether so I am on an even playing field with businesses. This would allow me to purchase my own health insurance at rates comparable to what I'm offered at work.
Maybe not. Businesses have more negotiating power because they're bigger buyers, so they would still have access to more competitive rates. Unless you got together with a lot of people to negotiate together (and this might be a startup opportunity).
> The choices of plans offered by companies is far, far smaller than the choices available to me on the open market.
On the flip side, the cost my employer pays for my plan is far lower than they would bill me for it on the open market. Last time I looked at the individual market it was amazing how bad even plans for $500-1000 were! They could give me a raise exactly matching what they'd stop paying and I'd still lose out.
Edit to clarify: That's not a "this is cheaper to us after we account for the tax break." That's a "this is the rate it costs us" vs "this is the rate it would cost you" difference.
The negotiation power difference is real. Private market health insurance would need to be well-regulated or we'll all just get screwed even more.
Employers like this because it gives them power over employees and makes it more attractive than being an entrepreneur not just to save money on taxes.
Edited to clarify that I was bringing up negotiation power because I think that is the difference here, not anything about tax preference. And this benefits companies because it locks employees in.
They could offer higher salaries, but would they? And employers are able to negotiate better plans than you can get in the individual market. There's no way i could get the plan i have through my work for the about $12000 they spend on it.
But I agree, healthcare should be provided by the federal govt like in every other advanced nation
I don't quite understand what you're envisioning. Our system depends on many employers paying for health insurance. You would have to change a lot of things about our system for it to be decoupled.
In South Korea the healthcare premiums are split between employees and the employers: https://en.m.wikipedia.org/wiki/Healthcare_in_South_Korea They don't have to negotiate group plans and maintaining coverage when switching jobs is pretty seamless.
There has to be a plan if employers stop providing insurance en masse, and I'm not sure it's a good idea to stop getting premiums from the source of personal income entirely. That seems to be a convenient place to get the kind of money that healthcare demands.
Better yet. The government should require all health prices be published online, with the same rate charged to all patients regardless of insurance provider.
Make this similar to gym membership. Let each person decide where to go based on cost and needs. With insurance remaining their for catastrophic events only.
People don't decide to have heart attacks or get hit by cars outside of a hospital that's in their network. Surviving heart attacks can cost half a million to over a million dollars if care was received out of network. Disability can easily costs millions over a lifetime, too. Price transparency won't suddenly make that affordable.
"Considering the tax situation, it's curious that Intuit would not choose to take this tax break."
Intuit did provide health insurance to these employees and take the tax break. There was a small gap between when the previous MailChimp insurance ended and MailChimp employees were placed on the Intuit offered health insurance. Once on the Intuit provided plan coverage was retroactive to the date the MailChimp plan ended. The employees could submit claims to the Intuit plan for reimbursement of medical expenses paid during the gap. The issue is that floating the money during this time could significantly impact the finances of the employee or that the employee may not have the funds to do so at all.
The reason for employer-offered health care plans is they are paid from pre-tax earnings. If the employee paid for it themselves, it would be paid by post-tax earnings, making it much more expensive.
Depends. If your employer doesn't offer health insurance, you can shop for plans on the government health insurance marketplace. These plans can have substantial subsidies.
Obama has not been in power in more than four years. If you want to blame someone, look towards those who refuse to vaccinate, die in the hospital after accruing huge medical bills that they don't pay.
USA employers started offering health insurance during World War 2 as a means of enticing women to come to work, as there weren’t enough men to fill the positions. And once that trend started, it simply never stopped.
It's true that they started offering health insurance during WWII, but it wasn't specifically to entice women into the workforce, rather it was to be competitive when Roosevelt created the Office of Economic Stabilization, which froze wages. Offering health insurance was a way to get around this.
>This would allow me to purchase my own health insurance at rates comparable to what I'm offered at work.
Would it? The employer can still call up an insurer and say "if you can give me a better deal than X, I'll buy insurance for 1,000 people" whereas you have maybe 5 potential customers to bargain with.
There is no “tax break.” It’s unlawful for me not to buy health Insurance for my employees (more than 50) and you aren’t allowed to shop the open market if you work for me. Average cost per employee is $1150 this year (up about 11% over last year). Thanks Obama.
Ouch - that would certainly be a significant cost. Regardless, individuals should always have the option to buy a plan on the market. We really need to decouple health insurance from employment.
It is not just the tax break that makes it cheaper for corporations to buy insurance. Companies with a lot of employees pay a lot less than individuals because they pool the risk. Back before ACA you used to be able to get in a pool with, for example, other small business owners and pay an amount similar to what companies pay but as an individual. ACA made those plans illegal and insurance that used to cost $500 per month jumped to $1800.
I wasn't aware the ACA made pooling illegal. Awhile back I tried to form a group with small tech companies in my town to do this, but the insurance companies all wanted a larger anchor company. None of the bigger tech companies in town wanted to participate b/c they saw their benefits as a competitive advantage. This was post ACA, and I don't remember anyone mentioning legality.
Small companies get crushed by insurance. Giving employees extra money in their check and telling them to use it on the ACA is probably most effective for all parties at the moment.
The tweet definitely leaves a lot out. My initial impression was, "that sounds reasonable." I got insurance retroactive to my hire date when I switched jobs last, but it took time for paperwork to be processed, so of course I would pay up front before then. But the article reads more like the sellers dropped the ball by cutting the insurance without ensuring their former employees were properly taken care of. There is plenty of blame to lay at Intuit's feet, but it's not like the former owners of Mailchimp didn't know what everyone else knows. Sounds like they just wanted some quick cash and everything else was someone else's problem.
> In the US, your health insurance is tied to your job.
Why on earth is it that it doesn't matter which party gets elected, you can't seem to get universal health care? Pick California for example, it's a rich state with a massive homelessness problem. What do the homeless mostly suffer from? Addiction and mental health.
Living in Europe and not having to worry about any kind of random health issue is great. If you have some problem, you get it seen to as soon as possible and not worry about whatever it may cost. As an employer things are simpler too, and in the long run, likely cheaper.
It just seems incredibly backwards and I'm not sure it really actually serves anybody. If you're big Pharma, you want your patients to live longer, as they'll get older and have more issues that you can sell products for. If they lose their job, that's lost income.
People love conflating people living on the streets as just homeless, but the approach to solve the problem really requires two solutions. The first is to provide housing for the people mentally capable of taking care of themselves. The rest require either public housing in a facility that can take care of them (abandoned mentally ill) or rehab programs that will hopefully help addicts recover and reestablish themselves. The mentally ill and addicts will not be able to function with just free housing.
There are typically quite some homeless programs running, but many get rejected for not abiding by the rules they (understandably) must have, i.e. don't be violent or do drugs. It's not enough to give these people a home, you must also address the reason they are homeless.
Most people tend to fall into moralistic behaviour regulation, but the reality is, quite often the barrier to improvement is homelessness and not drug addiction. Mental health is another thing, but it's much easier to provide care once they have a home/fixed address
> Why on earth is it that it doesn't matter which party gets elected, you can't seem to get universal health care?
Because Republicans can tie-up such laws in committee to prevent it.
Obamacare is a huge improvement over what came before. It's rather absurd to complain it isn't enough.
> Pick California for example, it's a rich state with a massive homelessness problem. What do the homeless mostly suffer from? Addiction and mental health.
California spends a considerable amount on generous public health programs. A great many homeless have health insurance from the public programs in California now. Tearing down all barriers would leave California at risk of medical tourism draining public funds.
> Because Republicans can tie-up such laws in committee to prevent it.
But this doesn't explain why it hasn't been achieved on the state level.
> Obamacare is a huge improvement over what came before. It's rather absurd to complain it isn't enough.
Not really, you can appreciate an improvement whilst looking forward towards further improvements.
> California spends a considerable amount on generous public health programs. A great many homeless have health insurance from the public programs in California now. Tearing down all barriers would leave California at risk of medical tourism draining public funds.
This sounds like a solvable problem. You could have an upfront tax or medical availability delay of a few years to make health tourism really unattractive.
Blaming other people sounds like a great way to not deal with the issue.
Historical and tax reasons. It started back in the era of WWII wage controls. It continued to be an okay way to do group insurance without facing major problems with adverse selection. Being able to pay for it with a pre-tax payrolld eduction is the other big reason it thrived.
Given the mandates on insurance there are some reasons it should continue, but they are not really good reasons.
> some reasons it should continue, but they are not really good reasons.
Many of those reasons are legislature that allows insurance companies to do/demand things that they really shouldn't be able to. Even if the goal isn't public healthcare, America still needs a major healthcare insurance restructuring.
I think that should look like this: HMO style access for all - automatically. Rebate if you decide to up it with PPO style insurance (or beyond). So you get 200 per month off taxes to pay towards your own insurance.
Also, get it out of the employers hands - as in make it illegal to offer any benefits and let the employee get paid 100% of their salary instead. Also make it so that employers can't legally collect taxes without consent.
You'll then create two systems – PPOs for the healthy that can afford it, underfunded HMO for those who can't.
Just drop the rebates, and make any secondary insurance be primary. That would make sure the insured group for the public system includes the healthy rich (which makes the pool for those that actually need and can't afford their health).
> It continued to be an okay way to do group insurance without facing major problems with adverse selection.
This is sort of a hot take, but there are plenty of examples of things like this in the US that have the unstated parenthetical "(because poor and minority populations were ignored by the system completely)"
Well yes, it was functioning as a health care plan featuring actual bona fide insurance, which means you paid for yourself, and you paid an amount commensurate with the risk that your health care needs might prove to be expensive. It was not designed as a wealth transfer to the needy any more than the auto insurance market.
We may need more wealth transfers to the needy so that they can pay for healthcare! You will note, however, that the recent approach to reforms, which tried to turn the vehicle of “insurance” itself into such a wealth transfer, has not exactly solved the problem!! Nor has it achieved its stated goal of making healthcare and health insurance more affordable to the general population, a mission always contradictory to its goal of being a wealth transfer!
So health insurance companies only have to convince your HR department to use them through some kind of grift instead of competing for your individual business on things like cost and in-network providers. Because the health insurance industry is focused on metrics like "number of lives we brought in this quarter" from massive deals that abstract your individual agency as one of a thousand+ lives covered under your employers plan. Who cares if you need to speak to a supervisor because your claim was denied, you're not going to get your company to switch plans.
Before someone says "but the healthcare marketplace", it's a joke. The individual plans we have today are ridiculously expensive because: A) the government will pay for folks who can't pay for them, so easy money for the insurance companies and B) the folks who can pay really need it (healthcare is inelastic), they're so few though so there really is no downward price pressure to compete for them.
> the government will pay for folks who can't pay for them
This depends on your state. Some states, like Wisconsin, won't offer medicaid for income reasons alone. I'm unaware of health insurance policies being cheaper in Wisconsin, though perhaps it's the case.
Ultimately because it drives down the cost of labor by locking employees in.
Employer’s cost per employee is much much lower than an employee’s cost directly from insurer. The employer “sells” the benefit to the employee at a higher perceived cost because of this.
Without an employer’s discount, an employee simply cannot get the same insurance coverage.
Thus, the employee agrees to working pay and conditions which would not be agreeable without the pressure to get health coverage.
Hence, lower cost of labor to the employer and pressure to keep the current structure in place.
Lets look back to the 90s when it wasn't legally mandated: some people did just fine (those with a lot of cash sitting around), most people suffered worse than they do today and some people were completely screwed by the system.
If it was illegal to pool health prices via insurance (instead of just not legally mandated for everyone to be insured) then the effect would be that those who went bankrupt under the old system would instead be dead.
I was very much alive, working, and insured in the 90s.
It wasn’t great. HMOs were being introduced (top down) and a lot of people had no idea how to use them.
The prices were nowhere near as high. The huge jump happened in the 2000s. It was nuts.
Regarding the bit about “health insurance companies could reject preexisting conditions” - most people got insurance through employers whose contracts required pre existing conditions be covered.
There were absolutely some places you could get totally stuck and screwed.
But things didn’t get bad until the 2000s, and it was mostly price that was the issue.
Michael Crichton, MD, and author of Jurassic Park (any many others) wrote a book about the state of the art of medicine in the 1960's called "Five Patients". Each patient was a case study for some particular aspect of modern medicine. Through that lends, Crichton examined the costs of the hospital and noted that they were growing well beyond inflation 50 years ago and assumed that the obvious fix was a single payer system to manage costs.
You'd make it illegal to pool costs by barring insurance - meaning that healthcare providers would either need to provide service gratis for the majority of the population (which is, really, just another form of insurance so that's out) or they'd need to secure a personal loan with their bank some time between getting hit by a truck and the operating table.
And for pre-existing conditions and long term health disabilities - the individual would need to somehow justify the profitability of their existence to a private underwriter who was willing to bear the cost - in most cases those people "aren't worth the cost of keeping them alive" (assuming you're looking strictly at numbers).
> meaning that healthcare providers would either need to provide service gratis for the majority of the population (which is, really, just another form of insurance so that's out) or they'd need to secure a personal loan with their bank some time between getting hit by a truck and the operating table
There's also the Chinese model, where you or your family are expected to have substantial cash savings on hand for any medical emergencies.
I don't have any direct experience with the Chinese health care system, but there's a lot that is not covered by insurance, and bribing doctors or hospital administrators to receive better or quicker care is supposedly widespread (and therefore is or is perceived to be necessary). https://www.newyorker.com/magazine/2014/08/25/under-the-knif... is a good overview.
Can you really call it 'insurance' when it's a pre-existing condition? I realize we can call insurance whatever we want, but when I think of insurance I think of it a way to pool for mitigating risk of the unknown.
No one would sell insurance that would fix your already destroyed roof.
> No one would sell insurance that would fix your already destroyed roof.
But they will sell you homeowners insurance in areas prone to wildfires or hurricanes. The difference is that you are expected to know the amortized cost of disasters for your property and either insure against it or simply accept the risk. Either way, you as a homeowner are supposed to make an informed decision. If disaster is too likely to occur in a certain area, you can either move or not purchase a property in the first place.
Science still hasn't figured out how to let us move into healthier bodies or choose our bodies prior to birth, so, alas, we are forced to seek fairness through other means.
Most of the building code is written with the blood of victims who died in a horrific accident.
If you want to know why doors in public places have to open toward the outside in modern countries and why "panic bars" are often mandatory, the answer is large piles of dead children (literally). Depending on who you ask and the country they live in, they will refer to a different disaster, but the common element in all of them is 70 - 600 people stuck in hallways unable to escape due to bad exit designs (eg. people piling up against doors that open towards the inside).
The unseen deaths are those who are unhoused or unsheltered due to building codes causing elevated building prices. Secondary effects (for those who can afford up-to-code) include less money to spend on healthy foods, good health insurance, quality child education, and other victimized children at the hand of building codes and other regulation.
You can virtually ramp up building codes ad-infinitum, until the house is as safe as can humanly be built, if your expense is to hurt a lot of children by bankrupting families of expenses to take care of other necessities in life.
Well, whatever we call it we as a society need to choose whether we want to keep people with expensive preexisting conditions alive. I don't think it's really necessary to debate the point since almost every western country has decided that their ethics fall in the camp of "Yes, we support those people and give them the best life possible" whenever they're actually pressed on the matter. For a while the US skated by on budgetary excuses but all the while I think society still idealistically held on to that standard - I think this point is fairly debatable though.
I think it's more a question of whether we'd be willing to install and maintain a roof on a building that had been designed without a roof in mind or whether we'd tear down the building to make room for a new one. You'd probably rationally lean in the second direction for a house - but when we're talking about a human life the math changes for a lot of people.
Either way, a return to an insurance-less situation would leave people with preexisting situations out in the cold, unless your definition of insuranceless involves government subsidies for all preexisting conditions and at that point you're basically talking about medicare for all.
I think as a society if we can't discuss this in an honest manner without deceptive terminology, we're doomed to be stuck in a bad spot. Perhaps phrasing it as charity of the healthy towards the less healthy would lead towards a more productive and honest starting point. It's something many, including myself, would be much more supportive of than feeling like I'm deceived by misrepresentation of a product. I'd feel like I'm taking part of a noble charity rather than this sort of deceptive 'insurance' product.
I don't see it as a charity so much as we, as a group, are pooling our money so that those that need health care get health care. That can be people with pre-existing conditions, people with a new condition, people that are in an accident, preventative maintenance, or even just normal life situations (pregnancy, etc).
In my mind, it's not charity because it's
- For everyone. Maybe not for you today, but maybe tomorrow
- For the benefit of society as a whole. If we let everyone who got sick just die, our society would be worse for it.
Characterizing insurance products in the US as a 'benefit of society as a whole' is a charity in and of itself. A large component of the insane costs billed for procedures has to do with an unhealthy symbiosis of the medical industry with 'insurance' companies. This massive black hole, much a result of poorly designed regulation, leads to reduced benefit to society as a whole and a system that is not for everyone not today nor tomorrow.
If you are thinking of something that is for literally anyone, you are most likely thinking of universal healthcare or some other like system.
I personally would avoid characterizing it as charity since charity tends to be an inherently voluntary action and charitable givers have some expectations on the usages of their charity. US charitable giving in a lot of areas of Africa continues to contribute to the illegality of abortions in many countries since the church groups offering aid condition their aid on moral stances they hold.
We've seen how the judgement of those receiving aid has affected US policy in the past - a handful of people are marked out as undeserving of the aid (maybe someone with a long term physical disability commits murder or something else) and then the full category of people are painted with suspicion (ala "welfare queens") and that suspicion is used as a justification to cut spending drastically under the guise of oversight. There are a fair number of people clamoring today for UBI for the reason, in my view at least, that it's the only way to undo all the complicated conditions on various forms of governmental aid.
I'd personally be quite in favor of keeping it dry, cold and governmental - healthcare is, IMO, an important enough topic that we can't let emotions override treatment. If we're going to put a bunch of money into a big pot we should have some very deliberate rules about how that money comes out and what it gets used for and posing it as a charity is going to get all sorts of rules applied to it (i.e. it can't be used for anything Planned Parenthood related, it can't be used for contraception, it can't be used by trans identifying individuals, you need to have a full time job to access it, it is unavailable to felons, etc...) - some of those rules might make sense, others might not. At the end of the day I think posing it as a charity will make it a lot harder to come up with a fair set of restrictions on it.
"those who went bankrupt under the old system would instead be dead."
The people who went bankrupt before were generally those without insurance. You've not said anything that explains to me why they wouldn't do the same under this supposed new system.
Well, in this current system everyone (excepting those who choose to opt out and pay a fine instead) receives a basic level of coverage - it's definitely not perfect and it has issues, I'm not going to argue against that. In the 90s and early 2000s it was much easier to bankrupt yourself due to extremely unlucky life events - but if insurance was prohibited you'd be unable to access care so instead of losing your house you'd lose your life.
I think I laid that out pretty clearly in the prior comment, is there some part of it that's unclear?
People without insurance used to get care and then go bankrupt. Today people without insurance still get care and then go bankrupt. What I’m not understanding is why people in this theoretical future without insurance wouldn’t do the same thing?
I feel like we’re talking past each other. Sorry if I’m being dense.
The blanket statement "people without insurance used to get care and then go bankrupt" does not apply to every single instance. Sometimes people were (and are) already so close to bankruptcy that they simply cannot afford the care that they need, so "I'll get health care and then go bankrupt" is not a live option for them.
Yes, emergency care has been essentially free in the US for those who can never pay for it, but that doesn't cover, say, chemotherapy. If you don't have insurance and don't have any way to generate significant cash (no house to sell and no wealthy generous friends) it's not that you're going to get chemo and it'll bankrupt you; you just won't get chemo at all (and you'll probably die). This is a little better now with the medicaid expansion, but not perfect, and not all states expanded medicaid.
Even today we have people dying of complications related to diabetes -- a serious but very treatable affliction -- because they can't afford supplies. In the US! The world's richest country!
I'd also clarify that emergency room services being treat first, bill later is itself a form of insurance. A decent chunk of emergency room costs are never paid by patients and end up being paid by... actually I'm not certain, but either private hospital corporations or the government. However, that is only for the initial triaging treatment. If, for instance, you are stabbed in the belly and some emergency patch work is done to stop the majority of internal bleeding and some antibiotics are issued with a scheduled regimen over the next few months to prevent sepsis then there is a limited supply you've gotten by the grace of emergency treatment but if your supply runs and you're unable to afford more at the pharmacy out you'll need to return to the emergency room to secure more meds. Emergency rooms regularly serve as extremely expensive pharmacies, but they're pretty busy places and the care you're seeking could be delayed and that delay can result in a perfectly treatable infection developing to the point of a mortal wound.
While everyone in America can receive emergency treatment no questions asked it isn't necessarily going to happen very quickly and can result in more health issues than being able to pursue medical care through more standard means.
I'm not following your first question do you mean to say why is mandating coverage legal?
My understanding of the mandate was that(theoretically) by more people being insured the population be healthier and that would someone how drive prices down. Obviously that's a farce as prices go up year over year. It would be interesting to see how much more basic procedures would be now after being adjusted for inflation compared to what they were in say the 90's.
Why have health insurance at all? It's just a middle-man for profit scheme between patient and health care.
Just have mandated health CARE for all and do away with health insurance altogether. Lots of companies would lose billions, but average people on the street would be the ones not spending that money.
If you made it illegal, people would start creating risk pools in ways that are technically legal. Such as membership clinics, special-purpose clubs, etc.
This is super incorrect; if anything, employer-based health insurance strengthened the unions' ability to negotiate for their workers. As a sibling comment mentioned, the major catalyst was WWII wage controls:
> During World War II, wage and price controls prevented employers from using wages to compete for scarce labor. Under the 1942 Stabilization Act, Congress limited the wage increases that could be offered by firms, but permitted the adoption of employee insurance plans. In this way, health benefit packages offered one means of securing workers.
> In the 1940s, two major rulings also reinforced the foundation of the employer-provided health insurance system. First, in 1945 the War Labor Board ruled that employers could not modify or cancel group insurance plans during the contract period. Then, in 1949, the National Labor Relations Board ruled in a dispute between the Inland Steel Co. and the United Steelworkers Union that the term "wages" included pension and insurance benefits. Therefore, when negotiating for wages, the union was allowed to negotiate benefit packages on behalf of workers as well. This ruling, affirmed later by the U.S. Supreme Court, further reinforced the employment-based system.
None of what you quoted here offers a different origin of employer-linked health insurance, and it avoids even mentioning that they were excluded from taxation. The fact that they weren't included in wage caps is just another benefit granted to employers.
> if anything, employer-based health insurance strengthened the unions' ability to negotiate for their workers.
In what way does having more that needs to be negotiated strengthen unions? You've heard the punchline without hearing the joke: why were unions prevented from negotiating pension and insurance benefits before 1949?
If you reversed the original sin of sheltering wages paid in the form of health insurance from taxes, you'd see stronger unions the next day. The biggest battle fought during the ACA war was about the possible taxation of "Cadillac" health plans, and ACA lost.
Yes. If I recall, it goes back to the Great Depression when there were cash shortages (and other issues).
It incentivized employers to compensate with benefits, not cash.
Around the same time, unionization became much more popular, and with it negotiated compensation (more benefits).
These were big issues in the North. In the South, the economy has was still largely rural, and many states provided publicly funded hospitals - so the dynamics were different.
There was a move for employers in to provide health insurance pre Great Depression. That was because larger employers could use their size to negotiate deals with hospitals. So health coverage was worth $individualPrice to an employer, but $negotiatedPrice to the employer.
In general, insurance providers preferred going through employers because employed people are healthier and file fewer claims.
Geico was an acronym for “Government Employees Insurance Corporation” which was a thing because government employees were a pretty safe bunch to insure.
So even back then, many of the dynamics we see now existed: negotiated prices, grouping, etc.
Do you want our health insurance plan, or an extra $1500/month to find your own on the open market would be an interesting way of looking at it.
But either way, both your employer and your cost for health insurance should show up on everyone's pay statements. Most have no idea what their employer pays for insurance.
I’m not sure of the underlying reasons, but I know most employers make it slightly cheap enough to be more affordable than Obamacare. But it’s still insanely expensive (ex: I pay $1920/m + $22k deductible for a family of four).
Negotiating as an individual in a market made up by large blocks makes you very easy to ignore. If everyone moved off employer insurance and into the market then, assuming we didn't have massive market corruption (which I think is a pretty big assumption), we'd all be on an even playing field. Asking individuals to do this independently is just a recipe for them to fail.
I think auto insurance is a good indicator of how it would play out if you made everyone do individual insurance. Insurance would still likely need to be legally mandated, like auto insurance, so that the insurance market would be solvent.
From there, insurance would likely break down into high cost / high coverage, mid cost / mid coverage, low cost / legally mandated minimum coverage.
The poor would end up with the low cost / minimum coverage plans as cost would likely end up being the main motivating factor. Given that 6-in-10 Americans can not afford an unexpected $500 bill (https://www.cbs19news.com/story/34248451/6-in-10-americans-d...), this would likely be the coverage level chosen by about half of Americans. These policies would be affordable, but I expect the deductibles and co-pays would be high enough to make it prohibitively expensive for policy holders to actually get much utility from them.
The other half would end up with the better plans, unless they were more comfortable with risk and elected for the cheaper plans. Their lot is probably pretty similar to today.
That article says that 60% of Americans don't have $500 in a savings account, not that they don't have $500. Savings accounts are an anachronism, it is like saying Americans don't have phones if they don't have a landline. By that standard, I'm flat broke.
Americans can afford a $500 expense just fine. The median American household has ~$1000/month left over after all ordinary living expenses, per the US Bureau of Labor and Statistics.
That infamous bankrate.com "study" is misleading in similar ways; they define terms in a way no reasonable person would to support a desired conclusion. Same for "retirement savings" and a bunch of other financial topics where the terms are misleadingly defined to create a dramatic headline. These are all clickbait articles that have been debunked countless times, and any careful reading of the studies indicates why.
Start from the well-sourced fact that median American households have ~$1000 per month to spend without sacrificing anything, and work from there. This can't be true at the same time all of those breathless headlines about broke Americans is also true. Without fail, if you dig into the details, the headlines are grossly misleading. The percentage of Americans that truly have no capacity to deal with significant unplanned expenses -- per Federal Reserve studies -- is 10-15%. A not inconsiderable number of people but far less than implied by the clickbait.
Average Americans have extraordinary amounts of discretionary income compared to almost anywhere else in the world. Americans both have a low savings rate and they have large amounts of money available to save.
Most employers don't offer to pay the premium out instead of the coverage, so they usually offer a much better deal than the alternatives.
Like if your contribution to your insurance is a few hundred a paycheck there is a pretty good chance that the employer is paying in quite a bit more than that.
Most companies (and employees) consider this part of the compensation package.
In most cases there is not an avenue to recover any lost compensation if you opt out of health insurance. If an employer offered a higher base pay for those not on their insurance plan, you probably WOULD see a much higher rate of those securing their own plans in the open market.
Complaining about benefits would be a weird flex though. The alternative of not having employer tied is still available.
A more rational phrasing may be: "I can buy insurance isolated from my employment, but I am priveleged to have the benefit and OPTION of taking advantage of employer benefits."
Maybe. But with employer provided benefits that comes at a cost to the employer. Thats why its a benefit and a part of a compensation package. (IE: you work for us and we pay you x, give you x in retirement and subrogate x on these healthcare initiatives).
If i am freeing the employer of that burden....should that not reflect back on my compensation? Surely you dont mean the employer should then be able to save more and basically lower their compensation for employees and expect the same return?
There are plenty of packages on the open market that are generally better than what an employer offers. But you are essentially making extra sacrifices by opting out with no benefit to you and all the benefit of the company.
It would make more sense for a company to even offer a HSA where they contribute as much as they would to a plan to a savings account and allow the employee to also contribute their share pre-tax. And apply that to plans available on the open market.
Inflexibly benefit offerings are why I generally prefer structuring my employment as 'contractor' / B2B, but I realize many people are unable to structure their employment that way. You're right that it would be advantageous if total compensation were better understood so that employees and employer could negotiate what works for them.
>It would make more sense for a company to even offer a HSA where they contribute as much as they would to a plan to a savings account and allow the employee to also contribute their share pre-tax. And apply that to plans available on the open market.
This is very strange, it's not even remotely rare to decline employer coverage - probably half my team either has their spouse on our company coverage, or no company coverage since they are covered by their spouse.
It's not rare. About 1/3 of my team has declined coverage now. But when were six people, and the minimum for BCBS to cover us was six people, we asked everyone to commit to the coverage so we could do it.
Most employers in the U.S. over about 1,000 employees are “self-insured”, meaning they hire the insurance company for the network and administration, but the company actually does directly pay out claims. At over 1k employees, I expect MailChimp was already self-insuring, and Intuit definitely does.
If you can suggest an edit that will fit within HN's title length limit that conveys the sentiment of the entire tweet, please feel free to do so. Appending enough of the missing text to convey anything useful violates the limit, but maybe the title could be compressed in another way.
I don't think I can edit the title anymore, but one of the mods can edit it.
The worse a company treats its employees, the less loyal they will be, and the more likely it is that one of them decides to earn money by abusing their insider access, either out of greed or despair.
The thing is that pre-acquisition mailchimp was an example of a place tech employees loved to work but not for the equity. The founders built a strong internal culture of private ownership and then bailed for a payday. If any other company sold out and employees got short changed, it wouldn’t make the news.
https://www.businessinsider.com/mailchimp-insiders-react-to-...
> When employees were recruited to work at Mailchimp there was a common refrain from hiring managers: No, you are not going to get equity, but you will get to be part of a scrappy company that fights for the little guy and we will never be acquired or go public.
The concept that you make (bad bad) companies pay out of their (outrageous) profit is a delusion.
Companies just take part of your salary and with that they pay medical cost.
I actually prefer paying it myself and having this thing called "free market" or competence work for me.
But in places like the US the system is extremely corrupt and designed to make it impossible for the free market to exist. This is inherited by the political system making mandatory for business to handle that instead of individuals.
In other countries you have things like mutuality organizations of people to provide healthcare, much much better and cheaper that what I see in the US.
> […] As I lie unconscious under a bus, I am in no position to shop for the best provider of ambulance services at the most reasonable price. All personal volition is lost. Whatever happens next, it will not be a market transaction.
- NHS takes care of emergencies. There is no stress of payment in these situations.
- I have private medical insurance through work. Its done by salary sacrifice so I can choose to take the money instead.
- I can buy private medical insurance separately. Providers like Vitality[1] offer things like Apple Watches and discount gym membership. Private medical insurance is generally quite cheap (Vitality just quoted me £40/month) as emergency care is done by the NHS.
- You can use private healthcare to speed up things that might take a while or you might not get an NHS referral for.
Of course there's some problems with the NHS in terms of wait times, but I believe that's more of an issue of funding. In the UK I feel like I have choice that won't break the bank and I'm also not going to die because I can't pay.
A free market of treatment options is feasible, but not a free market of insurance coverage. It's not really insurance if the unfortunate event is guaranteed to occur (has anyone in history been documented as never falling I'll?). The buyers have no option.
> Most americans are happy with their employee health plan. Why would they go on strike?
I'm not sure if your claim about most Americans being happy with their healthcare is right or wrong, but that doesn't mean it can't be significantly improved nor that it compares that well internationally:
Personally I'd choose the Swedish system over the American system any day. The US healthcare system is probably one of the main things giving me pause about moving back to the US actually.
edit: Americans perception of their healthcare is kind of interesting actually:
The US has long spent much more per capita than the rest of the world and has had worse outcomes than most (all?) comparable nations. Americans are good at rationalizing away this sort of thing ("we can't have better healthcare because we're fat"), but that's always just seemed to me a psychological defense mechanism more than a rational argument.
But yeah I guess you're right that Americans probably won't go on strike because they're happy enough. I can't really understand why they're happy enough, but I guess they are.
I don't know anyone who is "happy" with their employee health plan - some are ambivalent and think it's good enough compared with available alternatives, and some deeply hate theirs. But I cannot think of a single case of someone speaking positively about their insurance company.
This happens all the time when people switch insurance or go onto COBRA. You get retroactively covered for some period after your new plan becomes active.
It doesn't end up with people paying tens of thousands out of pocket, people just don't pay the bills that come in during that period, and kick them to insurance later. It sucks but is not really uncommon or possibly even something Intuit has a ton of control over.
COBRA wasn't that far off of marketplace prices for me. If I thought I'd use the better coverage/better benefits during the COBRA period, and I was confident my former employer would inform COBRA users of issues at least as well as they did employees, I might have considered it.
IIUC, COBRA rates are more or less the total employee and employer rate, maybe plus a limited administration fee? Also, I don't think COBRA pricing varies by age, but marketplace plans do, so if my spouse or I were older, COBRA might have been a good deal.
All that said, I think most people switching jobs keep the COBRA paperwork in case something big happens before they get new coverage in place. There's a grace period on the first payment, if you need coverage, you can pay until the grace period and get retroactive coverage; if you don't need coverage, don't pay. Some people even prepare the payment but leave instructions to send it in if they're incapacitated.
Not really surprised. Both Intuit and MailChimp have been carcinogenic to their customers, vendors and employees for ages now. People should strike and/or complain to their local authorities especially when stuff like this is usually put out black and white in their employment contracts. It will be far more effective than just lashing out on Twitter.
Family plan health insurance premiums on open market is $33K/year in New England (US). With group plans that goes down to $28K/year. A full time employee at $15/hr is $30k/year. The US healthcare system is fundamentally broken...
Is that for a very large family? Or maybe I don't know what "family plan" means exactly. I just got a plan on my own, not far from New England. I am paying about $450 per person per month, and I thought it was the best plan listed from the provider. As of this morning's doctor visit, however, I do agree - much is broken!
Another vapid Twitter thread making it to the front page by pulling on emotional strings. Personally, I'd like to see some proof of the claim before entertaining it.
It is not uncommon for paperwork to be delayed when switching insurers. I've had it happen at previous employers. The normal course of action in this circumstance is that you pay the bill after your insurance paperwork is sorted out.
If you go to the hospital and didn't know that your insurance expired, you probably won't even see a bill for a month, after the hospital gets the denied claim from your previous insurer. At which point, you'll give them the updated information, and they'll file the claim with the new insurer.
Usually the first bill arrives 30+ days after the service. And by the time you get final notice to pay it will be 6-12 mos after the first bill. Not defending Intuit or MC here, but this situation is not exactly as it is painted in that Tweet.
Considering there were no more publicity about this since tweet date (November 2021), it wasn't a big deal.
I've never experienced this idea of paying a provider 30+ days after the service. I've seen dentists, optometrists, PCPs, and whatever specialists PCPs have referred me to. If they determine that insurance won't cover 100%, I must pay the remainder to get any service at all. Sometimes I pay after the service is done but before leaving the premises; sometimes I must pay before service is rendered.
Are you located in the United States? This hasn't been my experience. The closest I've had is the office manager determining that I would owe a co-pay or co-insurance and be asked to settle that day. It's always an option to decline and ask them to send you a bill in the mail, which usually does come a month later.
What sort of service provider asked you to pre-pay?
But, at least for the hospitals and doctor's I work with, they all have zero interest payment plans. It is extra work to deal with, but drastically reduces the cash outlay.
I don't know ... this guy seems to have no knowledge of how complicated transferring employee benefits between organizations is. Its not so simple as just hitting a switch. The whole system conspires to fuck over individuals and small companies. Its nearly impossible to smoothly transition benefits during an acquisitions unless you get things exactly right ... or the acquirer is someone like Google that has an endless pool of money and just throws money at the problem to avoid a PR issue.
As for this guy complaining about his acquisition bonus. Why didn't he negotiate for stock when he was hired? I have always negotiated for a lower salary and more stock, as I wish for the lottery ticket and potential upside. If he wanted to trade off cash for stock, he could have done that. And it that was not on offer at Mailchimp then why didn't he go work somewhere else? Seems like they had some inducement, right? Or did he not understand the terms of his employment.
People are so TERRORIZED by the fact that they are only paid the amount they negotiated in their employment contract. YES, capitalism sucks if you just naively enter into employment without understanding what the compensation entails.
What would you like instead? Employment at a Public Sector Unit? I can assure you PSUs suck BAD for engineers. My father and uncles worked at PSUs before immigrating to the US and improving their fortunes 20X to 50X (no exaggeration).
If employees shouldn't complain about not receiving benefits they didn't negotiate for, surely they should get to complain about not receiving benefits they did negotiate for. Knowing anything about benefits administration is not the employee's job and it being "complicated" is not remotely their problem. If the terms of MailChimp's acquisition were incompatible with the terms of its employment agreements, then it shouldn't have agreed to the acquisition. Or it could make an honest attempt at recompense such as through bonuses. But they don't get to both eat and have their cake.
I agree with that. But employment is generally at-will in tech. Not fixed-term. Would he prefer to be terminated? When you go from one company to another there's a change in benefits. He could have COBRA for a period of time and then be back on the payroll of the acquiring company. That's no better.
I know nothing about this area, but why _isn't_ it as simple as flipping a switch? When the tweet mentions their insurance becoming retroactively available, this sounds very similar to the experience everyone has when starting with a new employer -- even if you're eligible for their insurance program with coverage starting your first day, it takes a bit for your benefits selection to end up in the insurance company's system.
Why? Why can't this be instant? Is something happening other than a couple writes in a DB somewhere? Why can the new employee not fill out the registration form online, and be immediately covered, and given a digital insurance card?
I have no idea. It has to do with the insured transferring from one insurer to another. There can be no overlap due to insurance laws and other complications. There has to be a perfect transition with 0 time in-between.
Looks like very old news. Although I would say that mailchimp as a company never looked employee friendly so at least for me it's no surprise. Intuit is definitely not an employee friendly company.
My advice is if you're still working for them find a new job.
I wonder what the state of this situation is now. Have they actually managed to smooth the transition or is it still a bad deal for Mailchimp employees that stayed on post merger?
Insurance does exist outside the employer. I've been self-employed all my life, so I've been purchasing my own insurance without an employer for about 20 years. I used to go directly to a company like Aetna or Blue Shield to buy my coverage, now I go to healthcare.gov once a year to pick a plan.
The gap here is that employer paid plans are subsidized by the employer, who uses them as a tax write off, making un-subsidized plans much more expensive in comparison
True. If you're self-employed, your health insurance premiums are personally tax deductible. If you're not and you make up to 400% of the federal poverty level, the government subsidizes marketplace plans for you similar to an employer. It's not just the self-employed that buy their own insurance, but all the millions of hourly employees that aren't offered healthcare benefits through their employer(s) either.
>>employer paid plans are subsidized by the employer, who uses them as a tax write off,
Calling them a 'tax write-off' makes it sound like something sinister is going on - just about everything a business pays to run their business is deductible, and thus a 'tax write-off'.
Do we call buying paper for the xerox machine a 'tax write-off' and thats the only reason business buy paper?
Its a cost of doing business - just like rent, payroll, heat, electricity etc - there is no special 'write-off' for providing health insurance for a typical company.
Mentioning that they're a tax write-off goes towards explaining why employer-subsidized plans can be cheaper than purchasing your own plan: the employer is buying it with pre-tax dollars, where an employee can only buy that plan with post-tax dollars.
I have no tax knowledge at all, but if you were to create a pass through corporation who purchased the health insurance on the behalf of its members, could you deduct said fees and then pass the savings onto the members the following years?
I guess the overhead of setting up such an organization plus the fact that said corporation wouldn't actually have any revenue are big issues.
You do not have to do all that, simply being self employed is enough. The people getting screwed are those employed by employers that do not offer subsidized health insurance. They simply have to pay for health insurance with post tax dollars.
The health insurance tax subsidy for self employed individuals is not as extensive as that indirectly provided to conventionally employed persons through their employer because it does not reduce the self employment tax, which is substantial.
Whereas with statutory employees anything the employer purchases in that regard is not included in the tax base for the payroll tax or the income tax, i.e. is basically tax free. Self employed folks are treated better than they were a few years ago (no deduction basically), but that is still a big difference.
You can! When you do that, you essentially get a "Health Share" organization, wherein you pay cash for health care and they reimburse you. Google the term to see which ones are out there. They are typically much, much, much cheaper than traditional insurance.
The biggest drawbacks to such an approach are that you have to deal with the quirks and rules of your organization -- read the terms carefully -- and that you have to deal with the paperwork from the medical system yourself. That doesn't sound so awful until you experience it. You can find reasonable primary care as a cash patient -- direct primary care is everywhere now, and almost certainly what you want: a monthly payment for someone on call to deal with your issues.
Urgent care is generally reasonable, too, being an up front single bill at a fixed price per type of issue. But Lord have mercy on you if you need to visit a hospital. The paperwork is stunning. A couple years ago, I went in for some observation and antibiotics for a couple of days, and came out with a dozen bills, all of which have to be called on, paid, negotiated, and some of which are possibly fake.
I just set up insurance for our startup. There are 4 possible plans: employee, employee + spouse, employee + dependents, employee + family. If you both get good insurance and low premiums, whoever gets the better would probably pick employee + dependents and your spouse use their employer’s.
Why can't health insurance be like car insurance again?
Why can't individuals negotiate premiums?
Why can't individuals switch to another insurance provider at any time?
Why can't insurance providers cover 100% over anything prescribed by medical practioners?
Seriously, why does any medical treatment in America have to be so opaque and stressful? We are regressing as a society if life is not becoming easier.
Yet another reason for medical care to have nothing to do with your employer … thank Obama for sealing that deal with the ACA / Big Insurance Company Handout. Good luck severing the connection.
If you researched the negotiations that led to the ACA, you would see that the public option was favored by Obama, but had to be nixed to get a few holdout senators on board. You can thank the Obama admin for at least getting rid of pre existing conditions clauses and for out of pocket maximums, which was more progress that anyone has made before or after.
This article presents your viewpoint along with quite a few others which mostly point toward Obama’s ineffectiveness and lack of effort toward accomplishing this while having a clear Democrat majority in both houses.
No surprise though as Obama era is not the only failure to move toward single payer … look at what California managed to accomplish with a vast majority of liberal Democrats a couple months ago …
Single payer on a state level is not tenable, so it is no surprise that it fails on the state level. It is simply numbers since states cannot prevent people from people who need healthcare moving in and people who help pay for it moving out.
Obama’s senate majority was not really a majority. Leiberman was basically yesteryear’s Manchin, and maybe there was a couple others, but either way, having 50 or 51 or 52 Democrats is not a clear path to victory that would make it reasonable to blame the Obama admin for anything.
Best way I can judge their performance/intentions is to note that ACA resulted in more healthcare for more people than any other legislation in recent decades.
Agree. Creating corporate sovereignty for insurance companies just re-enforces government interference in a free economy. As a result of the interference, health providers have continuously raised their prices far beyond what anybody would pay in a free market. If nobody had insurance, what do you suppose would happen to health care costs? Answer: They would adjust to what the market will bear.
> The employees Business Insider spoke with said they would be covered retroactively only once the paperwork was finalized, which left them on the hook to pay upfront fees.
This seems like many responses on HN are over reacting. Employees are not on the hook for previously insured medical expenses.
Almost all medical offices are happy to work with patients if the situation is explained before hand. For example my HMO has printed signs at every intake counter reading “Can’t pay? Call this number to discuss payment options.”
This situation sucks, but it’s really not much different from forgetting your insurance number and needing the front desk to front you the copay or deductible.
Mr Derrick seems to have gotten triggered by all this, which looks nothing but the unfortunate side effects of the US tax/legal system, and in that regard I'd guess it occurs often enough.
In the other hand consider that Mailchimp employees probably fared much better working on a digital all online product and getting their above average salaries than the average person, who actually lost their jobs, savings and health insurance due to covid
Is it really the unfortunate side effect of the US tag/legal system? As an outsider (from Europe), it seems that Intuit was able to take over Mailchimp, but was not able to smoothly transition their new employees from one insurer to another.
The only reason American employers are in the business of offering health insurance is because they get a federal tax break. This makes health insurance cheaper to the employer than to individuals. Given this, if my employer stopped offering insurance, they couldn't increase my salary enough for me to purchase the same plan myself. I think this is unfair - I would like to get the same tax break myself, or at least eliminate the tax break altogether so I am on an even playing field with businesses. This would allow me to purchase my own health insurance at rates comparable to what I'm offered at work.
Considering the tax situation, it's curious that Intuit would not choose to take this tax break. It seems like a short term move that allows them to cut costs while exploiting the economic stickiness of employment. This move makes them less competitive for employees in the labor market, but that only affects them in the long term. In the short term, the employees they have will be hesistant and slow to find new jobs.