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.