Employer Selection of Health Plans for Employees is Wasteful

One study estimates that employees would be willing to forego 10 to 40 percent or more of the amount their employer spends on their health insurance for the right to apply the remainder to a plan of their choosing. Hat tip to Arnold Kling at Econlog.

Comments (3)

Trackback URL | Comments RSS Feed

  1. Ken says:

    That’s fascinating. That implies quite a large welfare loss.

  2. Tom H. says:

    It also implies a large welfare gain from loosening the employer tie to emloyee health insurance.

  3. Bart says:

    I’m not sure what is being claimed.

    It doesn’t specify what percentage of the total premium would have been covered by the employer contribution. And it doesn’t say anything about the alternate plan is after-tax.

    It’s easy to imagine a scenario where the employer contribution was small to begin with, and an employee is happy to give up the entire amount in exchange for availability of a different group plan.