Contraception, religious freedom and employee health insurance
The Kansas City Star
Governor Jay Nixon’s recent veto of Senate Bill 749 requiring that health insurance companies offer policies that exclude family planning coverage to employers with religious objections is sure to re-ignite the debate surrounding a federal mandate that health insurance coverage include contraception and sterilization services.
According to its opponents, the mandate violates the liberty of employers by requiring that they foot the bill for health care services that are incompatible with their religious beliefs. Consequently, the governor’s veto has disappointed the likes of Missouri Catholic Conference Executive Director Mike Hoey who supported SB 749 because it “protects religious liberty in Missouri.”
As a male, I am careful to avoid offering unsolicited opinions about the morality of contraception or abortion (especially in mixed company), and, not being Catholic, I wouldn’t dream of questioning the beliefs of my many Catholic friends on the topic.
But, as an economist, I can offer a perspective that could shed a bit of light on the contraception coverage issue.
Economic analysis of the market for health insurance leads to a surprising and useful insight – employers do not actually pay for the health insurance coverage they provide to their employees. Instead, they collect funds that would otherwise have been paid to employees as wage or salary income and use those funds to purchase health insurance on their behalf.
My employer – a local, private university – offers health insurance as part of its compensation package for the same reasons many other firms do…health insurance benefits are not subject to federal or state income taxes, and similar coverage purchased individually by employees with after-tax dollars would be much more expensive.
Employer-provided health insurance is a fringe benefit much like employer matching retirement plans, sick leave, or paid vacation days. All are part of a broad compensation package. Economic theory and evidence show that – with the exception of smaller employers whose workers are paid relatively low wages – employees bear the full burden (in terms of lower wages or salaries) of their employer-provided health insurance benefits.
Many employees have learned this economic lesson first-hand over the last few decades when they were told that their annual raises must be sacrificed in order to cover rapid increases in health insurance costs.
How does this impact the debate over religious freedom v. contraception coverage?
Employers have no right on religious (or any other grounds) to tell an employee that she cannot buy contraceptives (or any other legal products) with her own wages to use on her own time.
The mistaken belief that employer-provided health insurance is different because the employer “pays for it” has created a controversy where none should exist.
The content of my shopping cart does not have to comply with my employer’s theology. Why should my health insurance claims?
Steve D. Mullins is a professor of economics at the Breech School of Business Administration, Drury University in Springfield, MO.