05 December, 2007

This is too much fun...

Yesterday, a friend forwarded this WSJ article about some of the cost of employer-sponsored health insurance being passed onto employees. The friend asks the question:

"Is it fair to make those people [with poorer health] work harder to meet (potentially impossible) benchmarks?"
Without getting into the meat of the article, I had the following gut reaction:

Would you agree that intelligence is partially genetic? Leadership ability? What about physical talent? Do you think it is inappropriate to make people who lack those genes work harder? Said another way: What's wrong with rewarding people who possess favorable genes? I see no reason to differentiate between any of these genetic traits. There is no way to level the playing field entirely. If we try, we will only be arbitrarily discriminating against people who lack some gene that we don't subsidize. Above a minimum, people should be free to use what was endowed to them in pursuit of their own best interest.

It is also important to note that a firm is not penalizing employees by passing on the cost of health insurance. On the contrary, if employees are pooled into the same insurance plan and still paid their marginal productivity then people in good health are subsidizing those with poor health. So, by providing everyone the same health insurance you are effectively penalizing people who are in good health by giving them a smaller total compensation package. So instead of saying:

“Employees at some companies who are overweight, smoke, or have high cholesterol, for instance, and who don't participate in supplementary wellness programs, will pay more for health insurance.”

It would be more straightforward to say that employees are paying closer to the true cost of their own healthcare rather than having their co-workers help pay for their smoking-habit and Taco Bell cravings. Essentially, workers are just compensating the company because it costs more to hire someone who has a fat ass or chain smokes (or blogs too much)....not counting the cigarette breaks and trips to the vending machine.

Then...this morning, I woke to see this post from Greg Mankiw. The point is that there are benefits associated with being good-looking. If you find it absurd to subsidize ugly people (or short people) then it makes it easy to punch holes in the logic and reason behind a lot of progressive policies. I’m not saying that great minds think alike, but…you know, whatever.

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