Duke University sent out their W-2s early last week and mine arrived on Saturday.* It contained all of the usual information. It also contains Box 12-DD with a medium to big number in it.
Box 12-DD is the amount of money that Duke paid for my family’s health insurance in 2019. Every employer that pays for some portion of the group health insurance premium has to report on the W-2 how much they kicked in. This is part of the ACA and the idea behind this is that total compensation is the sum of cash wages (the first couple of boxes on the W-2) plus benefits. One of the biggest pieces of the benefit slice is health insurance. The theory of change on this piece of the law is that if people realize that their health insurance premiums are replacing their cash wages, they would be more willing to make trade-offs between narrower networks, more restrictive plans, or lower actuarial values than they are currently receiving.
That has not worked out too well. I think part of it is that the insurance benefit manager and decision maker for group insurance faces a much different decision problem with very different constraints than an individual buying an Exchange plan or Medicare Advantage. The person in HR faces a budget constraint and a strong scream constraint. They want to make a choice that minimizes the number of people with power yelling at them because their cardiologist or preferred hospital is out of network.
I also think that an annual report is in the odd spot of a lot of information with out it being timely. I pay attention to the deductions on my paycheck. I know why and what is happening when I see my take-home number change. An annual report that has no direct impact on my monthly take-home is non-actionable information. I think it is worthwhile to pay attention to Box 12-DD but if the objective is make people more sensitive to the fact that their employer’s portion of health insurance premiums is coming out of cash compensation, moving that number to the top-line of each pay-stub and then deducting it as a pre-tax deduction would be far more effective as I think that would make the number far more real to people.
** I am not sure when I transformed from doing my taxes in a mad scramble on April 12th type of person to doing my taxes by the Super Bowl type of person but that is who I have become.