Thursday, July 3, 2014

Hobby Lobby

This strikes close to home, as many of my colleagues struggle to reverse the recent decision of our employer, Santa Clara University, to drop abortion coverage from our health insurance plans. The impact of Hobby Lobby on our situation, however, is probably at most indirect, because our own legal context involves state regulators rather than the provisions of Obamacare.

One of the arguments we have used in favor of retaining the coverage is that in the labor market, employees actually pay for most of their nonpecuniary benefits (such as health insurance) in the form of lower cash salaries than they would otherwise earn, so benefits should be treated as spending from compensation over which the employees should have choices. The fact that the employer acts as our agent in the health insurance market is an oddity of U.S. labor markets and a historical "accident." Uwe Reinhardt elaborates on the economics a little here. And this excellent post by Brad DeLong places the matter in the historical perspective of welfare capitalism, a topic I studied many long years ago in my Ph.D. dissertation.

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