Today I learned that my increase in employee contribution to health insurance would roughly match my tax break, and I'm forced to wonder: Does the payroll tax break amount to anything more than a subsidy for insurance companies? We should take the time to consider the implications of an employer-managed tax break, and limit employer-managed access to benefits whenever possible.
Today my employer announced an increase in our employee contributions to health insurance. The owner of the company walked us through the premium increases he was partially passing on to us. He went on to say that President Obama's payroll tax break would offset most of our additional premiums.
Now, I want to say that I respect and admire the small-business owners who have graciously given me a job. I consider myself lucky to get to do the work I do, and I appreciate that one of the owners informed us in person of the policy change -- rather than having HR send us an email. And, I can't complain at all: until today, my company covered 100% of our health insurance premiums. (If only everyone had it so good.) Nonetheless, it did bring a couple of questions to mind:
How many businesses will find a way to consume the tax break without passing it on to employees? What percentage of consumers will ever see this money? Is this really what the tax break was intended for?
Overall, I think it's just one more example showing why a system where employers provide access to benefits creates a conflict of interest -- and how allowing companies even further control over benefits puts employees even more at a disadvantage. I hope this particular "stimulus" tax break amounts to something other than another subsidy for the insurance companies.