Parting companies and their employees’ health care

By Charles Lane, Published: April 2 

The Supreme Court is pondering Hobby Lobby’s argument that Obamacare unlawfully burdens its corporate religious freedom by requiring it to offer employees health insurance coverage for certain forms of contraception.
Hobby Lobby’s case is that the Affordable Care Act confronts it with an impossible choice: paying for contraceptives that its owners’ faith prohibits as abortifacients; violating the employer-insurance mandate at huge legal risk and financial expense; or dropping coverage — which would cost $26 million in federal penalties and contradict the firm’s “desire to provide health benefits for their employees, which is itself religiously motivated,” as Hobby Lobby’s brief to the court puts it.

Charles Lane

Lane is a Post editorial writer, specializing in economic policy, financial issues and trade, and a contributor to the PostPartisan blog.

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This argument has strengths and weaknesses, but surely its most audacious suggestion is that the court should give legal weight to Hobby Lobby’s religiously motivated “desire” to provide employees with health insurance — even though the health-care law guarantees that workers could still get coverage, through the health-care exchanges, if Hobby Lobby declined to provide it.
Sounds to me like Hobby Lobby’s religion requires the company — and only the company — to look out for its employees’ health needs. That sure is a highly specific religious duty.
No doubt Hobby Lobby provides this insurance out of a sincere intent to fulfill that duty. But I’ll bet the federal tax exemption for employer-paid health insurance plays a role, too.
Given that it benefits from this feature of the Internal Revenue Code, Hobby Lobby’s insistence on delivering health insurance to employees in precisely the manner its company conscience dictates strikes me as not only a matter of principle but also a subtle manifestation of the great American entitlement mentality.
I’ll leave it to the court to sort that out. The real question is: Why do we have to worry about thorny issues like this in the first place? We wouldn’t have to if nearly 150 million Americans weren’t covered through employer-paid health insurance.
Potential crises of corporate religious conscience are just the latest pitfall of the employer-based system, whose accidental origins lie in World War II wage controls that encouraged companies to compensate employees with health care and other “fringe benefits” instead of cash.
Workers risk losing benefits when they switch employers; the resulting “job lock” reduces labor-market flexibility. And the tax exemption encourages overconsumption of health care, which drives up costs for everyone.
On the surface, Obamacare reinforces the system through such devices as the insurance mandate for large employers such as Hobby Lobby. But in other ways, the 2010 law undermines it, such as by imposing an excise tax that offsets some of the tax subsidy for employer-paid benefits and by creating the exchanges as an alternative source of coverage.
Ezekiel Emanuel, a former top health-care adviser to President Obama, predicts in a new book that Obamacare’s incentives will cause large employers to cease offering health insurance; Emanuel thinks fewer than 20 percent of private-sector workers will still be getting it in 2025, down from nearly 60 percent now.
From Emanuel’s lips to God’s ears. Of all the reasons to cheer the reported fulfillment of the administration’s 7 million sign-up quota for the exchanges, one of the best is the prospect that this country might develop a robust individual health-insurance market — ending “job lock” for millions.
If Republicans were thinking straight, they’d be cheering, too. Yes, Obamacare is still very much a work in progress and could flop in a thousand different ways — including from the failure of many enrollees to actually make their insurance payments, as the GOP predicts.
Nevertheless, exchanges, or something like them, would be at the heart of any market-oriented Republican alternative. Indeed, then-GOP presidential nominee John McCain proposed in 2008 to eliminate the tax exemption for employer-paid benefits and use the savings to subsidize an individual market — albeit with a different and, Democrats said, weaker method of insuring people who have preexisting conditions than the one in Obamacare. Three Republican senators recently offered a similar proposal.
In 2008, Obama attacked McCain’s plan as a tax increase, just as Republicans today are shortsightedly attacking Obamacare’s excise tax on employer-paid benefits, among other things.
Better for Republicans to admit that, for all their current flaws, the exchanges could be the building blocks of a system that breaks the link between coverage and employment — and start offering ways to improve them.
Some on the right concede as much. As Avik Roy, a health-care expert at the conservative Manhattan Institute told John Harwood of the New York Times, “It’s a better world where people shop on their own.”
Sooner or later, the GOP as a whole will have to embrace such arguments. Maybe after the election.

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