Props to Jennifer Goldblatt of The (Del.) News Journal for drawing attention to the latest trend in corporate cost-cutting and health benefits. With the cost of health insurance still rising far faster than inflation, many employers are trying to save money by only offering coverage for employees' spouses if they absolutely have to:
A growing number of companies are instituting what's known as a spousal surcharge, a penalty for having your mate on your health care plan when benefits are available through your spouse's employer. These surcharges come in many forms, but the bottom line is that employers are trying to cut costs by cutting the number of people they cover. …
About 39 percent of companies used a spousal surcharge in 2004, up from 16 percent in 2003, according to a survey by the National Business Group on Health, which is based in Washington, D.C. Calhoun said that employers who introduced a spousal surcharge have seen up to 27 percent of the covered people drop out of the plan.
One assumes that those 27 percent dropping out of the plan at Business A are in turn signing up for the plan at Business B. That doesn't seem to result in any net savings at all — particularly if you figure in the cost and inconvenience of switching coverage.
Consider why a person whose employer offers health benefits would opt instead for the coverage offered by their spouse's employer. You might choose to go this route if your spouse's employer offered a benefits plan that was more affordable, or more comprehensive, or both. The surcharge intended to make you switch to your own employer's plan will therefore result in your buying into coverage that is either of a lower quality, a higher cost, or both. So again I don't see how this could lead to any overall savings in the costs of health care.
The increasing popularity of "spousal surcharges" is a good example of the inefficiency and inhumanity of our employer-based health care system. This shuffling between the benefits plans of different spouses is expensive and inconvenient for employees and employers alike. None of this would be necessary in a single-payer system. Tell me again why such a system would be a bad idea?
Anyway, here's why it was particularly brave for Goldblatt to address the spousal-surcharge issue in the pages of The News Journal:
Starting next year, the Gannett Co., which owns The News Journal, will start charging workers $150 a month if a spouse can get coverage elsewhere but chooses to stay on Gannett's plan. …
Tara Connell, a Gannett spokeswoman [said] the company has gotten lots of questions from people trying to understand the new system, "and obviously there are employees who aren't happy."
I can't blame companies for adopting this marriage penalty in an effort to get some other company to shoulder some of their soaring health care costs. But from a big picture perspective, all this reshuffling only adds another layer of inefficiency and cost to our already inefficient and costly health care system.
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