AP Repeats Health Insurance Cost Shifting Myth
An Associated Press article, under the header “Workers bear larger share of health premium costs,” reports that “workers are paying a larger portion of health insurance costs as businesses, trying to ride out the economic downturn, shift more of the burden to their employees.”
The September 2nd Tom Murphy article adds: “The average employee contribution toward premiums for family coverage climbed 14 percent this year to nearly $4,000, according to a report by the Kaiser Family Foundation and the Health Research and Educational Trust released Thursday. Contributions for single coverage grew 15 percent.”
But this study repeats the myth that there is some difference between what they pay for health insurance and what their employers pay. That is just not true. Many workers believe they pay one part of their health insurance premium — say, $4,000 — and their employer pays the rest. But that’s not how it works. When your employer “contributes” the other $9,770 toward your premium, the money doesn’t come out of company profits. It comes out of your wages.
The Congressional Budget Office explains: “When an employer offers to pay for health insurance, it pays less in wages and other forms of compensation than it otherwise would, keeping total compensation about the same.” In a recent survey, more health economists agreed on this issue — 91 percent — than on any other question posed. In other words, you pay the full cost of your health benefits: partly through an explicit $4,000 premium and partly because your wages are $9,770 lower than they otherwise would be.