Employer-Sponsored Insurance After Roe

This may surprise some, but millions of Americans are unwittingly funding abortion through their company’s health benefits. What’s more, they have been for decades. This was controversial even before the recent Supreme Court ruling, but now the decision is adding insult to injury. With Roe gone, up to 155 million Americans are now funding an act that may not only be morally objectionable in their eyes, but is also illegal in 22 states and punishable by up to a lifetime in prison.

Over half of Americans receive health insurance through their employers. Many don’t have a choice of plans because their employer offers only one. Whether employees are offered one plan or several, 96 percent of workers still have access to plans that cover abortion. When employees enroll in such a plan, they participate in funding abortions for other people on that plan.

To make this moral dilemma clearer, it’s important to understand how employer-sponsored insurance works. When an employee enrolls into an employer-sponsored plan, she is receiving part of her compensation in the form of subsidized health-insurance premiums. The insurance company then uses those dollars to pay for the services used by herself and other employees on the plan—services that often include abortions.

How is that different from companies opting to pay for employees’ travel expenses to receive abortions in a state where abortion is still legal? Well, in these cases, companies are using general revenue to pay for those expenses. Conversely, when an insurance plan covers abortions, companies are using employees’ compensation to fund them. Even if employees never see those dollars in their bank account, the amount is entirely their own. Nevertheless, employers have near-complete control over how those dollars get spent.

But employees who don’t want to fund abortions shouldn’t have to. They should be able to enroll in plans that exclude the procedure. Even so, in most cases, their only option to avoid funding abortion is to turn down their company’s health-benefits package altogether and buy insurance on the individual market. They would forgo thousands of dollars’ worth of compensation and spend thousands out of their take-home pay to buy insurance. The vast majority of Americans simply can’t afford that alternative.

In a better world, employers that currently only offer coverage that includes abortion would make at least one health plan available that doesn’t. Doing so would not be financially viable for plenty of small businesses, because offering several plans is costly. Of course, large employers should have no trouble securing and affording such a deal—and that’s just what they ought to do.

Yet companies aren’t the only ones at fault for making so few options available. The government shoulders plenty of blame, and has for the last 80 years. 

During the Second World War, the government froze wages but ruled that health benefits weren’t subject to wage controls. Companies looking for creative ways to attract war-time labor decided to pay for employees’ health care. After the war ended, Congress codified the tax exclusion that big employers had come to rely upon. As a result, 91 percent of workers now have access to the gilded cage that is employer-sponsored insurance.

Subscribe Today

Get weekly emails in your inbox

As for so many of our health-care woes, Congress is most to blame for creating the incentives that push people to buy insurance from their employer. While doing away with the tax exclusion would take an extraordinary effort that we are unlikely to see in Congress anytime soon, policymakers should consider ways to promote a more thriving individual market by removing employers’ incentives to cover health care.

There are ways to do that, and they are not terribly complicated. For instance, Congress could make health savings accounts (HSAs)—which are similar to 401(k)s for healthcare—more widely accessible. In particular, they could allow people to use their HSAs to buy insurance on the private market. Lawmakers could also cap the tax exclusion to limit the benefits of offering health care.

While we wait for Congress to act, the judiciary isn’t skipping a beat. It’s clear that Dobbs marked not the end, but the beginning of what promises to be an intense series of court battles that will doubtless affect employer-sponsored plans. As such, employers should start rethinking their health benefits now. Likewise, lawmakers should reform the tax code to allow patients to spend their dollars in a way that suits their individual convictions and heeds the legal decisions made by 22 states and counting. Now that the overturn of Roe has people expressing public disagreement over the definition of health care, we ought to take the opportunity to reform our health-care arrangements and make progress on this decades-old problem.