Harold Pollack notes a number of advantages of employer-based health insurance, including the potential for large employers to serve as more reliable (and potentially wiser) purchasing agents than are individuals at sea in the health insurance market. But my experience as an employer makes me intensely dislike this feature of the U.S. health insurance system nonetheless.
It’s not that I don’t want my employees to have health insurance, but that I don’t want to have personal control over their access to it. The employer-based system is fine when an employee is doing well at work, but it creates an ethical and emotional morass when an employee is not performing.
Consider this fictionalized example based on real events. An employee you hired 6 months ago has been a disappointment. He is often late to the office and slow at completing assignments. His interpersonal skills are also substandard. He is sometimes out and out rude to his co-workers, but more often he is just lazy and manipulative on work teams and ends up getting his colleagues to clean up the numerous messes he makes. Good employees have complained to you that they feel angry and exploited by his behavior. He has been counselled about these problems orally and in writing on multiple occasions. Each time his behavior and work performance improved for a week or so and then slid back to its usual low standard.
As his boss, you set a meeting with the employee in which you detail the problems he has had, his failed efforts at correcting them when counseled to do so, and your decision to give him two weeks notice. And then he starts to sob.
“My little girl was diagnosed with leukemia three months ago! She’s on my health insurance and we can’t afford her treatment at the cancer center.” He reaches into his briefcase and produces the latest bill paid by his insurer: It’s more than his annual salary. Even the co-payments will be a challenge because he has no savings. “Please don’t fire me!” he begs.
You know he can’t afford to COBRA back his employer-based insurance. You can tell yourself that if you fire him, his child will be swiftly moved onto your state’s Medicaid program, allowing a seamless financial transition that will not even be noticed by her current clinical care team and cancer center. And also of course the Easter Bunny, who is trained in oncology, will lend a hand.
But you know the reality: If you fire this person and it takes him even 8 weeks to find a new job, his daughter’s care might be compromised by his loss of health insurance. As you struggle with the decision, some of the co-workers who formerly complained to you come in and start saying that the guy really isn’t that bad. You learn that one of your employees has a son who attends school with the cancer-stricken daughter and thereby learned of the family’s situation. The story has gone around the worksite and many people are now afraid that if they are honest with you about the problem employee’s continuing poor performance, they will be responsible for his daughter’s loss of health insurance.
Even though he was a terrible employee long before his daughter’s diagnosis, people who know better start saying that his work was always great before his family’s misfortune. Now some people are not only doing his job for him, they are also lying to cover up for him. Other continue to resent him and start resenting the people who enabling his poor work behavior. Meanwhile, the employee himself is clearly terrified of you, because he sees you not just as someone thinking about firing him, but as someone who has the power to end his child’s life.
Each day he continues to be a poor employee, wasting money, making life intolerable for his co-workers, alienating customers and putting the future of your firm at risk. And every time you reach for your firing pen you think of that little girl and your heart breaks.
What would you do?
What I concluded as an employer from experiences like these is that employer-based health insurance gives me far more power than I want or should have over the health of my employees and their families. Yes, I could just be a cold bastard and fire people like the employee in my fictional example, telling myself that if his daughter doesn’t like it she can complain to Adam Smith. But I’m not built that way and I don’t think most other employers are either. People who do their jobs badly may well deserve to be fired by their employers, but whether they and their families live or die should not also hang in the balance.