Health Insurance Should Not Be A Benefit

Nearby Kalamazoo Valley Community College has instituted a policy that they won't hire people for full-time positions if they smoke cigarettes. Predictably, it's all over the headlines.

The main reaction I've seen is from smokers and civil libertarians who argue that this is unfair.

They're right.

What you do in your own time is none of your employer's business unless it impacts how you do your job. It shouldn't matter if you smoke, drink, shoot heroin, collect assault weapons, attend anime conventions dressed in Sailor Moon costumes, worship Satan, sleep with your sister, or even vote Republican. All your employer should care about is whether you do your job as expected.

The KVCC administrators are coming at from an entirely different angle. They don't seem to actually care about the morals or ethics of smoking. It isn't that they don't want you to smoke; it's that they don't want to have to pay the increased cost of your healthcare because of it. That's why the rule only applies to full-timers: KVCC gives those people health insurance as part of their standard benefits package.

They're right as well.

The only reason this is an issue is because we have this bizarre notion that employers should provide healthcare to their employees. If they didn't have to, employers like KVCC wouldn't have any reason for this policy.

Employers didn't use to pay for people's healthcare. They started offering it as an enticement to potential employees back when the government had instituted wage controls, and they were already paying the maximum wage allowed. So they conceived of "benefits", a form of compensation that wasn't wages.

Wage controls are gone now, but the workforce has become so dependent on these standard benefit packages that employers can't drop them without losing all their best employees. Even if they adjusted their wages way up to compensate, the employees would be screwed, because it's nearly impossible for individuals to get good, affordable insurance on their own. If you ask any business executive, he'll tell you that the cost of providing health insurance is one of the key things driving layoffs, off-shore outsourcing, and generally poor profitability.

The obvious solution is to free businesses of this horrible burden. Not by eliminating health insurance (which is what seems to be happening to the lower working class), but by putting that burden where it belongs: on the government. The whole insurance system is based on "pooled risk", spreading the costs of caring for really sick people among healthy people whose healthcare costs are trivial. The larger and more varied the pool, the better it works. A "pool" of over a quarter billion U.S. citizens of all ages and races and genders and lifestyles seems like a pretty good one to me.

This is the point were small-government ideologues start wailing about "socialised medicine" and how horrible that is for patients. But the current system, in which patients are increasingly going without insurance altogether, is even worse.

My boss had a difficult time getting approval to create my job. The higher-ups said it was too much money for the amount of work she'd be getting out of it, so she had to scale back the request for a 32-hour/week position instead of full-time. That made it much harder for her to fill the job; she got lucky, with me being a bit desperate, and the extra cost of paying for my own insurance is making it difficult for me to stick with the job. But just think of how many jobs could be created if employers didn't have to include insurance in the cost, because their applicants already got it elsewhere!

Of course the money to pay for health care is going to have to come from somewhere else. To some extent, employers would raise wages, since they could afford to. Then employees could buy their own, and with the whole workforce doing that the cost per person would be lower than it is now. But it would be more effective and far more fair to go back to the "pooled risk" idea and just spread the cost across the whole population. Yeah, with taxes.

This suggestion always sends the anti-tax zealots into a frenzy, but it you look at it rationally, it's not like it's going to be a huge burden on Joe Citizen. He'll almost certainly be making more money, as his employer will be able to afford paying him more. On average, he'll probably come out even.

So if it comes out even, what's the point? The point is that it frees employers from having the administer people's medical expenses. It permits employers to create jobs more freely and flexibly, in particular to do so right when they need someone, not months too late when the business is already suffering from being understaffed. It spreads the cost burden more widely and more fairly among those paying for it. It gives employees more freedom to change jobs without having to change insurance companies and change doctors. It gives a parent more freedom to drop out of the workforce to have and care for children. It frees doctors and hospitals from hiring (or becoming) collection agencies, trying to squeeze payment for services rendered out of impoverished patients and/or reluctant insurer/employers.

These would all be good things for society, for individuals, for businesses, for the medical industry... Of course the insurance industry finds the whole idea of the government filling their role unacceptable. There's just so damn much inertia in the current system. And the anti-government ideologues keep shrieking "socialized medicine". Which is why it may never happen.