The only reason American employers are in the business of offering health insurance is because they get a federal tax break. This makes health insurance cheaper to the employer than to individuals
This is wrong on so many levels.
First, employers get a tax break because compensation expenses are generally deductible as "ordinary and necessary business expenses" required for the employer to be competitive in the labor market.
Second, employer policies are cheaper because the risk pool is cheaper to insure than the individual pool, so the insurers can make the same or more profits despite charging lower premiums.
The combined effect is to make employer-based health insurer significantly cheaper on both a pre-tax and post-tax basis than individual plans. But even without the tax benefit employers would still be incentivized to provide health benefits in a labor-competitive market. For example, many still provide free meals and parties to employees, even though meals are only partially deductible and parties are not deductible at all.
This is wrong on so many levels.
First, employers get a tax break because compensation expenses are generally deductible as "ordinary and necessary business expenses" required for the employer to be competitive in the labor market.
Second, employer policies are cheaper because the risk pool is cheaper to insure than the individual pool, so the insurers can make the same or more profits despite charging lower premiums.
The combined effect is to make employer-based health insurer significantly cheaper on both a pre-tax and post-tax basis than individual plans. But even without the tax benefit employers would still be incentivized to provide health benefits in a labor-competitive market. For example, many still provide free meals and parties to employees, even though meals are only partially deductible and parties are not deductible at all.