Buying Group Health Insurance Can Be a Bureaucratic Nightmare
It is a widely held assumption that the free market just can’t provide health insurance without government intervention. I have previously written about the ways in which the federal government intervenes in free markets in ways that prevent a competitive market for health insurance -- but every time I turn around, I seem to find yet another example of how the federal government injures poor people by regulating the health insurance market.
I am adjunct faculty at a community college. Partly because the College of Western Idaho has only been in operation since 2009, most of the teaching is done by part-time instructors, who get no health insurance benefits. A few of us have full-time jobs somewhere else that include health insurance, but most adjuncts are not that fortunate.
At the same time, because we all have at least a master’s degree, and are teaching the next generation, we are paid very poorly -- only a bit better than minimum wage, if you include the time we spend preparing curriculum and grading papers. If you ever wonder why so many college instructors lean well to the left, and start salivating like one of Pavlov’s dogs when they hear phrases like “social justice,” well, I think you can figure out the connection.
Because adjuncts are so poorly paid, many of them simply cannot afford to buy individual health insurance plans. Even with a high deductible ($5000) insurance policy, this turns into $800 - $1000 a month for individual health insurance for a family, and many adjuncts are fortunate if they net $2000 a month during the semester.
The adjuncts made a request to the college to offer some sort of group health insurance plan. We know that being a public institution, the college can’t actually afford group health insurance for the part-timers. The hope was that they could organize a plan that the hundreds of adjunct faculty could join, and pay at the substantially more reasonable group health insurance plan rates. The college was willing to do this -- but when they started making inquiries, they found out federal law prohibits this. Federal law requires an employer to pay at least half the costs of any group health insurance plan. Even if employees are willing to pick up the costs, this is prohibited.
I have been digging through the government bureaucracy, trying to find out the exact language that prohibits an employer offering an employee-paid group health insurance plan. I can find references to this requirement, but the law itself seems to be pretty well hidden in the bureaucratic rule-making system.
I am quite sure that it is not a result of Obamacare. When my son was working his way through college at a pizza joint, the owner expressed his desire to provide health insurance for his employees, but he ran into the same problem: he was required by law to pay at least half the costs of health insurance, or not offer it at all. Since the employees were paid just a bit better than minimum wage, and the owner was not doing dramatically better himself, there was no way that the owner could afford to offer group health insurance without reducing his workers' pay below minimum wage, which would be illegal.
I do not know when this absurd rule first went into effect, but it means that any employer who hires low-wage workers by law cannot offer group health insurance. There is no question that even if an employer could offer it as an employee-paid plan, many low-wage workers could not afford it. This would be unfortunate. But the current interference in the free market is worse: even those low-wage workers who can afford group health insurance may not purchase it.
If the Republican Party really wanted to win in 2012, they would raise this issue as an example of an absurd regulation that does not simply discourage group health insurance for the poorest workers, but utterly bans it. I would love to see the Democrats try to justify it.