Hobby Lobby Decision Masks The Real Problem: Our Country's System Of Employment Based Health Insurance
On June 30, the Supreme Court ruled in a lawsuit brought by Hobby Lobby that “closely held family” corporations can be exempt from certain mandates of the Affordable Care Act based on the religious objections of their owners. Lost in the arguments about this decision is the fact that the real problem is the system of employment based health insurance.
Hobby Lobby is hardly a small family business. It is a giant corporation with over 500 stores, a 3.4 million sq. ft. manufacturing and distribution center and employs over 21,000 employees. It is owned by its founder Daniel Green, who comes from a family of devout Pentecostals whose brothers have become pastors. Its stock is privately held, mostly by the Green family. It is not publicly traded.
No doubt Hobby Lobby is a good place to work. According to many articles written about the company, they pay their employees very well compared to other retail chains. The company also closes every Sunday and has a very generous policy regarding paid time off. They also provide very generous benefits to their employees. No doubt this is a fine company that is also profitable. It could be cited as a model company that not only is very profitable, but treats their employees and customers very well.
But should the owner of a business, no matter how large or small be deciding what kind of health care their employees should be receiving? Other than making sure that their employees are as healthy as possible so they are as productive as possible; what business is an employee’s health care to the owner of the company?
Because most Americans under age 65 get their health insurance through their employer; this leads to the employer making health care decisions that often are better left to the individual. In the case of the Hobby Lobby decision, the religious beliefs of the owner are being forced on the employees simply because it is the company that provides the health insurance for the employees and their dependents. If an individual does not believe in contraception, then that is fine. Providing coverage for contraception does not impose that belief on someone who objects to the use of contraceptives. Those who object to contraceptives just do not have to avail themselves of that benefit.
The real problem is the United States antiquated system of employment based health insurance. That system dates back to the Second World War when the government imposed strict wage and price controls. Pay raises for employees were restricted, but not “fringe benefits” such as employer paid health insurance. Labor unions negotiated for health insurance and companies provided it because it was a true win-win situation. The employees received an important benefit and the employer was assured of a healthier and more productive work force.
Employment based health insurance worked fine when the economy was dominated by large companies, organized labor was strong and most people spent just about their entire career working for one large company. But the economy is radically different in 2014 than it was in 1954. Workers are more likely to change jobs frequently and individuals are more inclined to work as independent contractors, whether by choice or not.
Health insurance has become much more costly as well. In the mid 1970s, a mid to large company spent on average of 15% of its payroll on employee benefits. That means that for each dollar paid out in wages and salaries, the company spent 15 cents on employee benefits. In 2012, that had increased to an average of more than 35% with some companies paying over 40% of payroll for employee benefits. Health insurance alone accounts for more than 25% of payroll for most companies and is by far the most costly employee benefit.
What is actually needed in the United States is for the nation to get away from the employment based model of health insurance and let that decision be made by the individual. Whether that new model is through the individual market or exchanges or through a government administered single payer system; the old system of employment based health insurance has long outlived its time.
Lee Kamps
Lee has been working with Medicare, Medicaid and private health insurance since he began working at the Erie County Welfare Department in January 1973 where a major part of his job was determining eligibility for Medicaid. He went into the private insurance business in 1977 with Prudential Insurance Company and within a short time had become one of the company’s top sales agents. In 1982, he was promoted into management where he managed two field offices and as many as thirteen sales agents. After leaving Prudential in 1986, Lee decided to become more focused on health insurance and employee benefits. He has advised many local employers on how to have a more cost effective employee benefit program as well as conducted employee benefit meetings and enrollments for many area employers. The companies Lee has worked with ranged from small “mom and pop” businesses to local operations of large national companies. Lee received his B.S. degree from Kent State University where he has been active in the local alumni association. He has completed seven of the ten courses toward the Certified Employee Benefit Specialist designation. He has taught courses in employee benefits and insurance at Cleveland State University and local community colleges. In addition, Lee is an experienced and accomplished public speaker. He has been a member of Toastmasters International where he achieved the designation of “Able Toastmaster – Silver” in 1994. He has also served as a club president, Area Governor and District Public Relations Officer in Toastmasters as well as winning local speech contests. Lee has also been a member of the Greater Cleveland Growth Association’s Speaker’s Bureau where he was designated as one of the “official spokespeople for the Rock and Roll Hall of Fame” prior to the hall’s opening in 1995. He has given talks and presentations before many audiences including civic organizations, AARP chapters and many other community groups. With the implementation of the Medicare Modernization Act (Medicare drug bill) in 2006, Lee has shifted his focus to Medicare and helping Medicare beneficiaries navigate the often confusing array of choices and plans available. As an independent representative, Lee is not bound to any one specific company or plan, but he can offer a plan that suits an individual person’s needs and budget. In addition, Lee is well versed in the requirements and availability of various programs for assistance with Medicare part D as well as Medicaid. While he cannot make one eligible, he can assist in the process and steer one to where they may be able to receive assistance.