Saturday, October 20, 2012

Gov't Mandates to Carry Healthcare Simply Reduce Employee Wages

If an employer only has $30,000 to pay an employee; he only has $30,000.  So when an employer is forced to buy an $8,000 health insurance policy as opposed to a $5,000 policy the employee loses $3,000 in wages and must take that compensation as benefits even if he or she wanted it as pay. More government equates to less choice and less freedom.  But then again we all knew that. The below illustrates this point quite well.   

An NBER Working Paper  estimates that people who gained employer-supplied health insurance as a result of the Massachusetts mandate saw their wages fall by $6,055 per year, an amount only “slightly smaller in magnitude than the average cost of [employer supplied health insurance] to employers.”

Was it worth it? The authors estimate that workers value the coverage at only about 76 cents for every $1.00 their employer was required to spend. This implies that employees are worse off by more than $1,500 per year, on the average.

Source: Doctor John Goodman, September 20, 2012.