Maybe slavery is a bit harsh, but my editor suggested that I use an eye catching title and that fit the bill. But even if employer paid healthcare insurance isn’t exactly the same thing as forcing you to work for no compensation under threat of severe violence, it is bad for our economy and bad for workers.
First a little background. Employers do not pay for anything of yours. Employers (I say this as a former business owner and employer) trade your labor for compensation. Anything that they “give” you, you have earned. They look at the total amount that it costs to have an employee and balance that against the value of having that employee. From the employer’s perspective, the only relevant question is: “does this person working for me make (or save) me more money than they cost me?” Employers consider the total cost of that employee: salary, payroll taxes, office space, tools, worker’s compensation any other direct or indirect costs and benefits. Many employees only see what they get in their check, but trust… the fully loaded cost of an employee is far more than what the employee sees in that paycheck. Employees obviously want as much as possible, employers want that total cost to be as little as the employees will accept, so employers seek to find ways to minimize their cost while simultaneously “giving” the employee something that they will highly value. If you’re worth $100, we’ll pay you $100; but we’d rather pay you $70, and buy you something that costs us $20 but you think is worth $40. In that example, you then cost us $90 but you feel like you’re getting $110.
But how can employers buy something for less than employees pay for the same thing. There are several issues, but the main one is taxes. If you want to buy something with your money, you have to pay income taxes on it first. Imagine that you get a $10,000 per year raise, how much of that will you actually see in your paycheck? If you make $100k per year and live in California you’ll pay a 28% federal income tax, a 6% social security and 9% state income taxes. In other words, that $10,000 raise will land in your pocket as about $6,700. And to make matters worse, that additional $10,000 will cost the employer at least $11,000 because they have their own federal and state employer payroll taxes as well as worker’s comp insurance to deal with. On the other hand, for employers, the full cost of healthcare benefits is just as deductible on their taxes as any other business expense, so if they buy you a $6,700 health care plan (about average for a single person), it costs them $6,700, not the $11,000 they would have to pay you so that you could buy it yourself.
During the recession, many people learned the hard way how much insurance actually cost, because when they lost their jobs they were offered the right to buy the same insurance that their employer had bought for them at the same price the employer had paid (through the COBRA program). Many people were shocked to find that the payroll deduction that they thought paid for their benefits didn’t even come close (in 2015, employers paid on average between 70% and 80% of the premium). Even worse, many found that when they tried to replace that COBRA coverage with something less expensive on the individual market, that the cost was even higher than the great plan that they had had through their employer, if they were insurable at all.
But back to why Employer Paid is bad for you. It’s bad because it gives power to the employer at the expense of the employee. If you like or need your coverage and that coverage is not available to you on the individual market at a price that you can afford (basically because you might actually need it), then you’re stuck, and you have to keep working for your employer. Not surprisingly, this is one reason why many employers do like it. Also, it favors large employers (who have bargaining power and therefore get better pricing) over small businesses (which are basically treated like individuals).
The same reason that it’s bad for employees is the reason that it’s bad for the economy. Employees are stuck in situations that are not the best use of their labor when they are tied to a specific employer because of that employer’s health care insurance.
If the Republicans repeal Obamacare, it will be even worse. Currently, coverage is available on the individual marketplace without regard to you or your family’s pre-existing conditions. But if the ban in considering pre-existing conditions go away, any employees who have had disqualifying illnesses are stuck under threat of not being able to treat potentially life threatening illnesses. Losing their job could be a literal death sentence.