Workers Increasingly Prefer Pay to “Benefits”
The Employee Benefits Research Institute (EBRI), a research organization with a mission “to contribute to, to encourage, and to enhance the development of sound employee benefit programs and sound public policy through objective research and education” includes members as diverse as AARP, Aetna, Boeing, Charles Schwab, and Wal-Mart. In the benefits world, it sits firmly inside the establishment.
That is why EBRI’s latest research on how employees view their benefits should give some encouragement to reformers who want to change the tax treatment of health insurance, and weaken the iron triangle of big business, big labor, and big government which enforces the discrimination against individually owned insurance. From EBRI’s latest Note:
- There appears to be the start of a trend away from being satisfied with the current mix of benefits and wages, toward more preference for fewer health benefits and higher wages. Between 2012 and 2015, the percentage of workers reporting that they are satisfied with the health benefits they currently receive fell from 74 percent to 66 percent. At the same time, the percentage of workers reporting that they would rather have fewer health benefits and higher wages has doubled, increasing from 10 percent to 20 percent.
- Workers have mixed views about their preferred methods for obtaining health insurance. Nearly one-half (44 percent) prefer to continue getting coverage the way they do today. Four in 10 prefer to choose their insurance plan, having their employer pay the same amount it currently spends toward that insurance, and then paying the remaining amounts themselves. And 17 percent prefer their employer to give them the money and allow the workers to decide whether to purchase coverage at all and how much to spend.
- Choice of health plans is important to workers, and many they say they would like more choices. Eight in 10 report that choice of health plan is extremely important (41 percent) or very important (39 percent), and 17 percent report that choice is somewhat important. Thirteen percent are extremely interested in more choices, nearly one-third (30 percent) are very interested, and over one-third (37 percent) are somewhat interested.
This is a politically important shift. Many politicians, especially Republicans, know it is absurd to require workers to get their health benefits from their employers to get a tax break. Whether there should be any tax break at all for health spending is a valid question. Whether there should be a tax break for individual home ownership is also a valid question. However, nobody proposes we could have avoided the housing bubble of 2008 if people had only been able to claim the mortgage-interest tax deduction if they lived in a home chosen by their employer!
Politicians who would equalize the tax treatment of health benefits whether acquired individually or in the workplace are divided on whether the tax break should be a tax credit or standard deduction. However, these proposals have not gotten traction among leadership. At the behest of big business and big labor, the Republican-majority Congress recently delayed the so-called “Cadillac” excise tax on high-cost employer-based benefits for two years.
Unfortunately, Republican politicians have been way too risk averse to give a serious push to removing the discriminatory tax treatment of individually owned health benefits. The misleading and scare-mongering sound-bite, “they’re going to tax your benefits,” has been too terrifying to counter.
This new evidence, that workers are getting fed up with benefits chewing up their pay raises, should give these politicians a little more courage.
Eliminating all benefits from the employment equation is a superb idea. For decades, I have shunned employment as a computer engineer, preferring contract work on a W-2 or, even better, a 1099. For that I have earned an hourly pay rate double that of the captive employee, though I forwent vacation pay, sick leave, health insurance, pensions and, sometimes, the use of the gymnasium. Benefits generally represent just another transfer of wealth from the young, healthy, single male to the older, sick, married breeding female.
What people are concerned about is the cost of the premium and deductible. They have no idea about the tax consequences of Individual Policies unless told.
EBRI is advocating a reduction in hard costs for business while leaving labor to the free market or government programs.
Just another method of “Privatize Profits with Socialized Costs.” Or as some would say Externalization of costs…
No, it’s called internalizing the positive and negative externalities.
I’ve always said that if the average American family realized they are paying $15,000 of their $60,000 annual income on health benefits, they’d balk and demand more control over their money!
Employees should have a choice of either having $25,000 in employer-based health insurance or having $25,000 added to their paycheck.
I remember how the EBRI hated the tax-free HSA. Their “research” indicated that employees didn’t desire tax free money. I think they have an agenda.
Devon, I think $15,000 is too low for family insurance.
Devon, that is exactly why we are in the situation we are in. No worker in his right mind trying to get food on the table for his family would be paying the amounts Obamacare and the collectivists have created. They would have stopped this nonsense years ago, but for the lies and conniving of the collectivists. People with weak minds actually believed that Obama could provide less expensive care with better quality and choice through a government bureaucracy. They were deceived on all accounts though some are still very confused.
We need the individual in control of the money.
Allan, it’s interesting you refer to Obamacare supporters as collectivist. That is an accurate assessment of Obamacare proponents views. Rather than segment the market and encourage every patient to watch their spending, Obamacare attempts to boost cross subsidies from young to old, health to unhealthy. Yet, as any economist could have told them it doesn’t work well. Pouring more money into the insurance pool won’t bring down spending — quite the reverse. In order to hold down medical spending, what has to be done is to squeeze the funds going into health care. For example, as a thought experiment, let’s suppose health insurance was outlawed tomorrow and everyone was then forced to pay out of pocket. Many people would be harmed by such a policy. But the market would quickly stabilize. Doctors would change their practices to cash-only (and probably find it is actually better without the overhead). Patients would become price sensitive. Hospitals would be hardest hit but even they would be forced to adapt.
I’m not making a policy proposal. But any way we can reconnect patients and providers, while getting the third-party out of the way would improve competition.