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Jobs Don’t Equal Insurance
Created by accident, the system of employment-sponsored-insurance (ESI) has grown haphazardly over the last fifty-years and is now the backbone of our health care system. In fact, nearly two-thirds of the population under 65 is insured via their employers. This can lead to the false conclusion that the key to addressing the problem of being uninsured is to “get a job”
It's not that simple.
Approximately 14.5% of the employed have been uninsured for over a year, according to the CDC. This could be for a variety of reason. Maybe the plan offered is too expensive or maybe they work for a company that does not offer insurance. Those people are chronically uninsured, even thought they have a job.
Furthermore, the “get a job” argument overlooks the problems of underinsurance. According to a Commonwealth Fund study, 20.3% of insurance offered by employers classifies as underinsurance meaning that the employee spends more than 5% of their income on out-of-pocket (OOP) payments. Additionally, the study concluded that OOP payments grew by 34 percent between 2004 and 2007. Approximately 57% of that increase is due to higher cost-sharing, which is when employers require employees to pay a larger portion of the bill. The other 43% is due to higher premiums.
When a persistent recession strikes, it gets a whole lot worse. Lots of people lose their jobs and because few companies are hiring, many go without insurance. In the best economic times when jobs are aplenty, it can be easier for an employee to find a job that offers some form of insurance. But we should not take that as optimal; ESI suffers from several structural flaws that guarantee its inefficiency.
First, employees and employers want different things from their insurance. Companies want a flexible plan whose benefits they can change according to their financial situation. Employees want the opposite; a stable plan that meets their needs. This is compounded by rising costs that employers do not want to or can't pay, thus pushing off the expense to workers.
Second, an ESI system makes it impossible for consumers to shop around and compare insurance options. You either use the insurance provided by your employer or chance it in the individual market.
Ultimately, insurance is about the person, not about the job. Tying one to the other creates an entrenched system that is hard to break, and even more inefficient.
Posted in Health Care | Related Topics: Health Insurance Small Business Working / Middle Class Issues
4 Comments
July 12, 2012 at 11:44 pm
Entrepreneurs are chained to jobs with the golden handcuffs of health insurance. These innovative spirits could be creating our next small business if only they could buy affordable health insurance independent of a corporation. But then maybe this is why the republicans are fighting so hard to get rid of Obamacare….they have to keep workers tied to jobs to ensure a pool of laborers to earn even more money for their billionaires. Free the entrepreneurs and watch the growth of our economy.
July 12, 2012 at 12:22 pm
What I have noticed is my fellow employees are dropping our insurance cuz of the high deductibles and are going on their spouses. The problemis that the amount paid by the company was part of their income & when the company quits paying they dont get that money. The company justs pockets it. Another example of our going to a more feudal system where you have the ruler & his subjects. The middle class is giving up all of the gains fought for by our parents & grandparents. The tea party has convinced its members that pensions & other benefits are un-American. Instead of complaining about union pensions, ask yourself “where’s yours?”.
July 12, 2012 at 11:00 am
Employers currently have no legal obligation what-so-ever to provide health insurance for their employees and their dependents but as the article noted, many, many do. With continual increases in the costs of health care coupled with the increasing pressures on the employers’ bottom line, it is not surprising that the actual cost of health care to most folks, i.e. deductibles, co-payments and co-insurance has continued to increase as as a result. In an effort to move towards universal access to medically necessary health care, the new ACA will penalize employers and employees who do not have coverage for the purpose of expanding the pool of covered folks to include lots of health folks along with those that need lots of services to spread the risk.
Lee says:
July 13, 2012 at 1:51 pm
I am self employed and I buy my own insurance. I could be covered by the coverage that my wife has at work, however the cost of that insurance is far greater than the Health Insurance that I can buy on my own. The reason for the high costs include miss-use and major claims. The rates for group health insurance is based on a reasonable return for the Insurance Company and that is only fair to them. Another reason is that I also can make the decisions on my own if I want to have a high deductable or co-pay. Because I am concerned about long term costs I have a high deductable and have saved thousands of dollars over the past 10 years. I also employee Union construction workers who have Union Health Insurance. The cost of my health premium compared to them is more than $700 per month less. Ask your progressive law makers why they have choosen to allow the Unions to opt out of the new Obama Care program. That should be an interesting discussion. My thought is that insurance is to cover the major issues in my life and does not need to cover every aspirin that I purchase.