“This blog is one of the very few places on the Internet ― maybe the only place ― where you can find out about these perverse incentives and the reasons why they arise” – John Goodman
“Suppose an employee pays 25% of the premium after tax. Given a 40% marginal tax rate (combined federal and state income taxes and payroll taxes), the insurance would have been 10% cheaper if the employer had made the full payment instead. If the employee pays 50% of the premium, a 20% discount is left on the table…..”
“In saying this I am ignoring the fact that most employers mis-price the employee’s share of the premium. Although small employers may age rate, large employers typically charge employees the same premium regardless of age. If employees are charged 25% of the premium, this means that a young worker’s share is closer to 50% of the real cost and an older worker’s share is closer to 10%. ……..”
“Almost all the insurance products being sold to employers these days have first dollar coverage (or small co-payments) for doctor visits and preventive care……. At the same time, these plans can cost an employee $10,000 or more in case of a hospital visit. (The new law restricts the total.)”