Employer mandate in Colorado
July 2nd, 2008 | by Brian T. Schwartz |
The Denver Post reported last week that the United Food and Commercial Workers Local 7 is pushing a ballot initiative (currently “Ballot Proposal 92“) that would make criminals out of any Colorado company for not buying their employers insurance. Companies employing fewer than twenty people are exempt.*
The Union calls it the initiative ”Employee Responsibility for Health Insurance.” I’d call it
- a self-serving attempt to give unions more bargaining power
- an intolerant and authoritarian attempt to make criminals out of people who fail to do what you want them to do by threatening them with government punishment
- a violation of the rights of employers to run their business according to their own best judgement
- a naive and economically illiterate proposal that ignores the unintended consequences of government controls over our choices.
- [Update] A way to cause unemployment for low-wage non-union workers, and hence open up more jobs for union workers. See here.
Remember that employer-sponsored insurance locks people to their jobs and offers patients few choices of plans. The tax code that subsidizes employer-sponsored insurance is also responsible for insurance companies having little incentive to please patients, and for “insurance” acting like prepaid health care, which encourages over-consumption and discourages providers from competing on price.
And do employees benefit? In their book Healthy Competition, Michael Cannon and Michael Tanner argue that they do not:
The drawbacks of employer mandates outweigh any benefits. The amount of compensation each worker receives is a function of her productivity. Mandating an increase in a worker’s compensation (through the provision of health insurance) increases the employer’s operating costs, but does nothing to increase the worker’s productivity. Employers therefore must find ways to offset the added costs imposed by the mandate. Their options include raising prices (which is unlikely in a competitive market), lowering wages, reducing wage increases, reducing health benefits (e.g., drug coverage, retiree health benefits) reducing other benefits (e.g., pensions), instituting layoff, initiating automation, reducing hiring, hiring ineligible workers, out-sourcing, and refusing to comply with the law. Noncompliance with Hawaii’s mandate has been significant.
Instead of perpetuating our foolish employer-based system, unions should support policies that empower workers rather than themselves. For example, see here.
* According to the Census Bureau’s 2005 data, Colorado has about 128,000 firms employing 1.9 million people. The number of firms with 20 or more employees is about 14,700, or 11.5% of all Colorado firms. That doesn’t sound like much, until you consider how many people these larger firms employ: about 1.5 million people, or almost 80% of Coloradans.
You might also like:
