The Decline of Employer-Sponsored Health Insurance

 By David Blumenthal, M.D., Tuesday, December 5, 2017, The Commonwealth Fund

Excerpts. Read complete article here. 

Toplines

• Employers are shifting costs for job-based health insurance to their workers
• Employer-sponsored health coverage provides far less protection to U.S. workers than it once did

Millions of working Americans are gearing up for what’s probably the holiday season’s least popular ritual — learning how much their employer-sponsored health insurance will cost them next year. For many, premium contributions, deductibles, copays, and coinsurance will go up. At the same time, many will also see only tepid increases in their wages. This will leave working families across the country with the sense they are spending more of their income on insurance that doesn’t protect them as much as it used to.

Everyone with a stake in reforming our health care system should pay attention to what this means and the rising discontent that paying more for less engenders among U.S. workers. Job-based health insurance is the largest single source of health care coverage in the United States and it is not what it used to be for many people.

. . .

From a political standpoint, the reach of privately purchased and provided employer-sponsored insurance may be the most important reason that the United States, unlike all other developed countries, has never adopted a universal health insurance program protecting all its citizens against the cost of illness.

But new data suggest that job-based health coverage provides far less protection to U.S. workers and their dependents than it once did.

. . .

A recent Commonwealth Fund report found that in 2016, nearly a quarter of working-age adults with job-based coverage had such high out-of-pocket costs and deductibles relative to their income that they were effectively “underinsured.”

. . .

A major factor in the rising number of underinsured people covered by employer plans are ballooning deductibles. The share of people covered by job-based insurance with deductibles exceeding 5 percent of household income grew sixfold, from 2 percent to 13 percent, between 2003 and 2016.

The declining generosity — some might say adequacy — of employer-sponsored insurance stems from several factors.

First, health care costs are growing faster than workers’ wages. This means that health costs take a bigger chunk from workers’ paychecks every year.

Second, health insurance premiums have grown more slowly over the past few years, but many employers are not sharing those cost savings with workers.

But the longer-term risk for job-based coverage is the inability of most employers — despite their power as the largest purchasers of health care services — to stem rising health care costs. Though some very large employers that run their own health insurance plans, like Comcast and Boeing, show considerable sophistication in managing their workers’ health care bills, they are the exceptions.

The overwhelming majority of employers lack the staff and expertise to manage the intricacies of health care markets.

. . .

Increasing underinsurance among working families should raise alarm bells for policymakers and advocates both for and against increased government involvement in health care. If employer-sponsored health insurance continues to become less and less adequate over time — and we have every reason to believe it will — the discontent of middle-class working Americans with the cost of their health care will inevitably increase.

With that discontent will likely come increased calls for dramatic reforms in our health insurance system, reforms that will better protect the millions of Americans who have long depended on protections they received in the workplace. Some of these discontented Americans may become more receptive to government interventions in private health insurance markets.

Read complete article here.