Unhealthy insurance.

Unhealthy Insurance

IF LEGISLATION could provide everyone with the finestmedical services, gourmet food, suburban estates, designer clothing, and luxurious automobiles, there would be no poor people anywhere in the world. These things may be scarce and valuable, but legislation is not. Senator Kennedy will soon introduce a bill to require employers to buy health insurance for all workers and their families. This scheme would require workers to take more of their pay in the form of one particular fringe benefit, less in wages. If trading lower wages for medical perks is what the alleged beneficiariesof the bill really wanted, they would already be seeking out the many employers who offer that sort of package. The senator's proposal is best understood as a mandatory tax shelter, reducing both wages and taxes.

Combined wages and benefits cannot possibly beincreased by legislative fiat. Employers who paid more in wages and fringes than their employees added to revenues would soon be out of business; those who paid less would not be able to attract and retain skilled workers--and would also be out of business. Wages and benefits are thus set by competition for workers. Moreover, wages and benefits are always paid by consumers, not by employers. Employers can't pay more for workers unless consumers are willing and able to pay more for the goods and services those workers produce. Inflation can raise both wages and prices, measured in shrinking dollars, but only more real output per worker can raise real income per worker. To require employers to pay something extra for a perk, like health insurance, is to require them to offer either lower wages or fewer jobs. This suggests a name for Senator Kennedy's bill: "The Low-Wage, Low-Employment, Tax-Dodge, and Subsidy-to-Blue-Cross Act."