Hobby Lobby's Unintended Consequences

Politico Magazine ^ | July 1, 2014 | Ezekiel Emanuel

[2ndDivisionVet]

America's crazy, patchwork health-care system just took another hit.

Which would you prefer: to have the ability to decide for yourself and your family the type of coverage you want to purchase on a health insurance exchange—and having your premiums subsidized by a defined contribution or voucher from your employer—or to cede that ability to your employer entirely, having them pick your insurance for you, but empowering them to decide, based on their personal religious beliefs, which services to cover and which to exclude?

After Monday’s Hobby Lobby decision, this is exactly the type of choice that more and more Americans will face.

When considered in the light of the entire Affordable Care Act and the struggle to reform how health care is purchased and provided to patients, Hobby Lobby is simply not that big a deal. After all, it does nothing to change the individual mandate to have health insurance, the Medicaid expansion, the variety of programs to improve the quality of health care in the United States and those programs aimed at changing the payment system and thereby reduce costs, such as Accountable Care Organizations and other demonstration projects. These are all proceeding unaltered by this latest ruling.

The Supreme Court’s conservative majority, however, does seem to have added one more reason to doubt the wisdom of having employers be the main sponsors of health insurance in the United States.

Employer-sponsored health insurance arose in the United States due to an accident of history. During World War II, the federal government set wage and price controls to stabilize the economy and guard against wartime inflation. Health insurance benefits, however, were exempt from the controls. In 1954, Congress passed legislation that carried this exemption into taxation, so that in the second half of the twentieth century, employer contributions to health insurance would not be subject to income and payroll taxes. Most Americans, as a result, get their health insurance through their employer.

But health economists and experts across the political spectrum deplore this system. It promotes job lock, fuels health care inflation and keeps wages down. But after 60 years, it has become ingrained into the American economy.

To minimize disruption and reassure most Americans, the Affordable Care Act kept employer-sponsored health insurance intact. The ACA includes an employer mandate enforced by a $2,000 per worker penalty: Employers with more than 50 full-time workers who do not provide insurance that satisfies a minimum requirement must pay.

The minimum requirement includes preventive services from vaccinations to cancer screening tests to cholesterol screening. It also includes contraception. The Hobby Lobby case basically says employers need not cover contraception in the health insurance it provides.

The conservative majority carefully sculpted its decision. It specified that it applies only to “closely held” corporations, those in which five or fewer people own 50 percent of the shares. It specified, “This decision concerns only the contraceptive mandate and should not be understood to hold that all insurance-coverage mandates, e.g., for vaccinations or blood transfusions, must necessarily fall if they conflict with an employer’s religious beliefs.” Corporations can’t use this exemption as “a shield for employers who might cloak illegal discrimination as a religious practice,” according to the court.

But these limits are not as limiting as they seem. The closely held corporation limit is no limit at all. It turns out that more than half of U.S. employees work for closely held corporations. While many are small, many, like Hobby Lobby, are large. And it gives an incentive for more employers to become closely held corporations.

The justices in the majority go to great lengths to state that the Hobby Lobby decision is limited to contraception. But no principle differentiates contraception from blood transfusions or vaccines—or, for that matter, any other health-care services that employers find objectionable on sincerely held religious grounds. The only principle the court seemed to provide is that contraception could be provided in other ways that were less burdensome to the religious liberties of corporations. For instance, the government could provide or finance the services rather than require corporations to do so. But that applies to absolutely everything—after all, Medicare and the VA system, which provide medical services to Americans across the continuum of care, show that the government can provide or at least finance any medical service you can imagine. (Ironically, this argument is easier to make for vaccines, which many state and local governments already provide to millions of Americans, than for contraception.) Furthermore, the court all but invited other employers to bring suits to test what the limits of this religious based exemption are and have it adjudicate the least restrictive method of providing a particular service. Activist judges indeed.

Laws and court cases almost always have unintended consequences. An unintended consequence of the Hobby Lobby may very well be to further undermine employer-sponsored insurance. There has never been a mandate requiring employers to offer health insurance. (The employer mandate under the ACA does not go into effect until next year.) Yet many employers—99 percent of employers with 200 or more workers—already choose to provide health insurance. Why? To attract and retain workers, and because it is much easier and cheaper for employers to provide insurance than for individuals to get it on their own.

The health-insurance exchanges change this calculation. They provide a way for workers to get insurance that is easy to shop for, affordable and cannot exclude them on the basis of pre-existing conditions. The exchanges also have two big advantages for workers. They offer much more choice than the typical employer. In the exchanges, most workers get to select from many different insurance plans at different price points. And workers get to retain the same insurance—with the same physician and hospital networks—even if they shift jobs or start their own company.

Nevertheless, many if not most American workers seem to still want employer-sponsored insurance. This is no surprise. While we may not like our current health insurance, we are anxious about what might happen in the great unknown of exchanges. And we are unsure if our employers’ contribution would be the same. So, all things considered, most people think it is better to go with the devil they know than the one they don’t.

Hobby Lobby adds one more reason to tip the balance against employer-sponsored health insurance, though. As of today, an employer can now refuse to cover contraceptive services based on religious beliefs. Tomorrow it might be vaccines, mental health or some other services. Many workers, especially women, might begin to think it is just better to have a voucher—or the equivalent, a defined contribution—from their employer and go into the exchange and decide what insurance plan to buy. Having my employer decide—or even having the power to decide—what basic services are covered now starts to seem intrusive and presumptuous.

On its own, Hobby Lobby will not end employer-sponsored insurance in favor of a voucher system. But it adds another reason for workers to want it to end. And the reasons will continue to accumulate—wider choice of insurance options, more job flexibility, more control over services, and so on. Check back in a few years. After Hobby Lobby takes hold, employer health insurance vouchers begin to look a lot more appealing.

Thanks to Sam Alito and friends, the end of America’s crazy patchwork system just got a little closer.

[Elsie]

Good post!

WE must understand the tactics of the Left.

Got Alinsky Rules handy?

[bert]

I’m a media bias man......

Always of interest is the daily Rat/moonbat talking point that miraculously gets distributed to all the media to assure concentration of the message...... ie

PRINCIPLE 2: PROPAGANDA MUST BE PLANNED AND EXECUTED BY ONLY ONE AUTHORITY

From the bowels of what building does the daily propaganda message emanate?

[Elsie]

From the bowels of what building does the daily propaganda message emanate?

Good question!