Politics & Policy

Will Your Employer Know You Are Pregnant before You Do?

The Wall Street Journal reports that employers are hiring firms like Castlight HealthCare to sort through data on their employees in the hope of encouraging healthier behaviors and reducing claims against the company health plan:

To determine which employees might soon get pregnant, Castlight recently launched a new product that scans insurance claims to find women who have stopped filling birth-control prescriptions, as well as women who have made fertility-related searches on Castlight’s health app.

That data is matched with the woman’s age, and if applicable, the ages of her children to compute the likelihood of an impending pregnancy, says Jonathan Rende, Castlight’s chief research and development officer. She would then start receiving emails or in-app messages with tips for choosing an obstetrician or other prenatal care.

If the idea of Bill Lumbergh nosing around your decision to have a baby sounds a little Orwellian, well, it is. And you can thank the federal government for that.

The potential for Big Data to improve health care is enormous. But that potential remains untapped, mostly thanks to countless efforts by government to “improve” health care. Government interventions, from Medicare and Medicaid to the huge tax preference for employer-sponsored insurance, entrench a way of organizing and paying for medical care — health wonks call it “fee for service” — that makes it impossible for researchers to collect and use patient data to avoid unnecessary services, identify adverse drug reactions, and on down the line. I weep for the decades of data that have vanished in the wind rather than allow health plans to improve health-care and patient outcomes.

So we should all celebrate these tiny efforts by Castlight and others to put Big Data to use for patients, right? Wrong, because the federal government went ahead and threw Dwight Schrute into the mix.

Generally speaking, if your employer offers you $13,000 worth of health insurance as part of your compensation package, you get $13,000 of health benefits. You lose none of it to taxes. But if you ask for that $13,000 in cash, so you can use it to pick your own health plan and avoid dealing with Justin Pitt, you have to pay taxes on it. Thousands. Of dollars. In taxes.

The federal government thus penalizes people who want to pick their own health plan. After taxes, they can end up paying twice as much for the same (or less) health insurance. That tax penalty is probably the only reason that 90 percent of Americans with private insurance surrender control over $13,000 of their income, as well as their choice of health plan, to their pointy-haired boss.

#share#Adding insult to injury, the tax preference for employer-sponsored health insurance creates incentives for employers to discriminate against workers who might file a lot of health claims, and to discourage claims by sticking their noses into your personal health decisions. What could be more stupid?

If you guessed “Obamacare,” you’re a winner! The tax code merely encourages C. Montgomery Burns to scan you for a baby bump. Obamacare literally tells women, “You should report . . . becoming pregnant” to your Obamacare exchange “as soon as possible.” (Emphasis mine.) Can poor Julia at least walk home first? Apparently not, because the federal government needs to know if it can kick her out of her exchange plan and dump her and her new baby into Medicaid.

In a market system, workers would not be trapped the way American workers have been for 70 years. Workers could choose employer-sponsored health benefits or cash, without penalty. They could choose a health plan based on how well the plan uses data to improve health care, and the extent to which it respects their privacy. Different consumers would choose plans that make different tradeoffs between those two goals. The creepy situation we now face, where the government uses a huge tax penalty to bind us to the health plan of someone who might want to misuse our medical information, is totally alien to a market system.

To give patients both the benefits of Big Data and the privacy protections they desire, Congress needs to eliminate that tax penalty and return that $13,000 to workers, so workers can use it to purchase a health plan that strikes the right balance for them. Congress can do so by replacing existing tax preferences for health care with Large Health Savings Accounts.

Until then, things are just going to get increasingly awkward around the water cooler.

Michael F. Cannon — Mr. Cannon is director of health-policy studies at the Cato Institute and co-author of Healthy Competition: What’s Holding Back Health Care and How to Free It.

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