DRAFT: Your Employer Isn’t Paying for Your Health Insurance. You Are.
Most Americans get health coverage through their jobs — paid for with money that was already theirs.
Most Americans believe their employer pays for their health insurance.
It’s one of the most widely accepted assumptions in the American economy.
But the truth is stranger than that.
In most cases, the employer is not actually paying for the insurance. The worker is paying for it—just not in a way that appears on a paycheck.
More than 160 million Americans receive health insurance through their employers, making it one of the largest compensation systems in the American economy.
Economists have been pointing this out for decades. When employer health insurance premiums rise, wages almost always grow more slowly. When insurance costs stabilize, wages tend to rise more quickly. The company writes the check to the insurance provider, but the money nearly always comes from the same source: the worker’s total compensation.¹
Once you understand that mechanism, a very ordinary moment in a very ordinary American kitchen starts to look different.
A machinist comes home from work on a Tuesday afternoon and notices a thin corporate envelope sitting on the counter.
At first glance, it looks like junk mail—the kind with a logo in the corner and a plastic window showing your address through cheap paper. He ignores it while he eats dinner, but eventually curiosity wins, and he tears it open at the counter.