Do we want employment based health insurance?

 

Why is there not more support for an expanded employer role in providing health insurance to all Americans?  I sense a certain exhaustion among decision makers and employee benefit professionals as they grapple with costs that just defy control. I notice at professional conferences an increasing openness to the single payer model.    

We have seen one cost control fad after another.  More and more employers are dropping health benefits in order to stay afloat.  In this game of Old Maid, those employers who do provide benefits struggle to maintain their social compact with their employees without footing the bill for the rest of the world.

The rest of the world? How does that occur?  In a number of ways.

They pay more than their fair share.  Doctors and hospitals complain that the compensation they receive from public programs like Medicare and Medicaid is inadequate.  Hospitals complain about the cost of providing uncompensated care.  How do these entities survive?  Because private payers, read employer plans, pay more than the cost of care.

They pay for other firms’ employees.  Thursday morning (Jan 29th) there was a story on NPR’s Morning Edition about the high cost of COBRA coverage.  Almost overlooked in the story was that the woman’s employment based insurance supported her husband’s small business.  My church employs three people, all of whom have health insurance through their spouses’ employment.  We  do appreciate that support, but is that fair to those employers?

They pay for ineligible dependents.  One of the latest trends for cost control is an eligibility audit.  Employees must provide proof through birth certificates and marriage certificates that the dependents on their plan are eligible dependents.  Our plan has always been fairly strict about providing documentation for new dependents.  But for years we didn’t question the dependents of new hires.  I don’t know whether to laugh or cry when the occasional employee contacts our office to add a new spouse.  We inform him (usually a him) that before he can add a new spouse he has to provide documentation that the previous spouse is either deceased or divorced.   That’s when we learn that he was never married.

They pay for retirees.  There are still plans thatoffer coverage to retirees – mostly government plans.  Often those retirees work for other employees or are self-employed.  Why should their former employer pay for the  cost of their health care.  The auto and steel industries illustrate how those legacy cost distort the market. 

But there are other arguments that point to a less pivotol role for employers in the provision of health care.

It skews the competitive playing field.  Firms that provide health insurance are at a competitive disadvantage  against firms that do not.  Firms that also provide retiree health insurance are at an even greater compettve disadvantage. 

It reduces employment flexibility.  Health insurance is a fixed cost per employee.  That  economic fact goes against the grain of recent employment trends such as more part time work, less overtime, job sharing, and phased retirement.

Some employment plans and employer coalitions have been voices for change within the health care system.  Much of the current emphasis on pay for performance and quality measurement got its big push form employers and unions.  Many employers have aggressive Wellness initiatives at their work places.  

The ideal reform effort will relieve big businesses of the disproportionate share they now pay for health care and make health care more affordable for small businesses and non-profits, while preserving that positive voice advocating for employee health and the welfare of health care.