Business and Health Care Costs
By Arnold Kling
In an essay arguing against relying on linking health insurance with employment, I write
If employers bear the cost of health insurance, then I’m the Easter Bunny. It is fairy-tale economics to believe that “nice” employers give away health insurance, while “mean” employers withhold it. In reality, employers compensate their employees using a combination of cash and non-cash benefits…
when you factor out inflation, total compensation has gone up while take-home pay has gone down. The data prove that workers are paying more for health insurance.
The essay goes on to suggest that disintermediation is taking place, in that a smaller share of the labor force is working for employers that offer generous health insurance. This reflects some workers choosing to pay for health insurance themselves or to do without health insurance, as a way to increase take-home pay.
On another issue of “Who really bears the cost?” Alex Tabarrok writes,
If tenants benefit from a law that says apartments must have hot water then surely a law that says tenants must have hot water and a dishwasher benefits them even more, right? What about a law that says tenants must have hot water, a dishwasher and cable tv? By now the students have cottoned on to the idea that the rent will increase. Once you realize that the law causes the rent to increase it’s no longer obvious if tenants benefit or if landlords are harmed.
For Discussion. Many people casually assume that employers will bear the cost of health insurance and landlords will pay for amenities because they can afford it. What is wrong with this thinking?