The Incidental Economist Gets it Right

Since I beat up on these guys the other day, let me throw some praise their way. Austin Frakt has an excellent post up this morning explaining why employer-paid health insurance is paid for by lower wages and not by lower profits (or for that matter, by higher consumer prices). Employer health insurance mandates are paid for by the workers themselves. Surprise!

Comments (7)

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  1. Nichole says:

    Frakt makes a vaild point about the quality of employees that will be outsourced to larger firms due to salary and health care benefits.

  2. Robert says:

    “Employer health insurance mandates are paid for by the workers themselves” ≠ surprise. Costs trickle down, not up.

  3. Devon Herrick says:

    Studies — and common sense — support the notion that employee health coverage is just a component of employees’ total compensation. If a worker does not produce enough value for the company to cover the company’s cost of employing him (including health benefits), he will soon be looking for another job.

    There are a few exceptions: Human Resources managers tends to think of health benefits as just another cost of doing business — but they’re mostly misguided in this regard. To a small degree, the design of health benefits tends to be a function of what HR executives and senior management wants in the way of health coverage. Sometimes managers find themselves between a rock and a hard place when they attempt to pass on the total increase in the cost of health benefits to workers. But, for the most part, whether or not a firm offers health benefits is a function of whether workers are willing to forgo take home wages sufficient to cover the cost.

  4. Kyle says:

    No one seems to care what kind of damage raising the minimum wage does, votes are all legislators care about.

  5. Tommy Smitherton says:

    Glad to see you give praise when it’s due!

  6. Afton N. says:

    I think we would all like to see healthcare separated from employment and replaced by higher wages and individual plans.

  7. Laura Concrete says:

    I agree with Afton.

    Bottom line: If you don’t offer your employees incentives to stay, don’t be surprised when they are gone.

    “Leaving Employers Behind” —> Perhaps a new title for a continuation of a series on “Leaving Women Behind”? I know I would be very interested in reading more about what John Goodman has to say on this issue.