Guest opinion: Problems with employer-based health insurance
COVID-19 has shown that health insurance provided by employers has serious problems.
Being laid off anytime is bad, but during the pandemic it is doubly ominous: Not only is your income gone, but if your former employer provided your health insurance, so is your ability to pay medical bills. Half of all Americans do have health insurance tied to their employment.
Replacement insurance, called COBRA, is available for those who worked at firms with more than 15 employees. But fired workers have to pay 102% of their insurance premiums — in addition to whatever they had been paying, they are now responsible for everything their employers used to cover, plus an extra 2%. Many find the extra COBRA expenses impossible when they have no income.
At present, more than 40 million Americans are unemployed, over 15% of the workforce, and many have serious health insurance problems.
Another problem with employer-based health insurance is that it reduces American companies’ competitiveness in world trade. For example, it adds roughly $2,000 to the price of every car that U.S. companies produce. Japanese, Korean and German vehicle makers have no such handicap.
A third defect in employer-based health insurance is that it reduces employees’ freedom to choose where they work. Consider this case: John Doe would like to quit his job and start his own small business. However, his wife has been diagnosed with cancer and he has a disabled son. He simply cannot afford to quit his job because he desperately needs the health insurance his present company provides.
Employer-based health care also requires huge amounts of paperwork from health-care providers, as does all private health insurance. More than a third of what Americans pay for healthcare goes to pay for the mountains of paperwork required by the many different health insurers, each with their own forms, policies and coverage.
So how did we ever get into this employer-based healthcare system? One of many causes is that in 1943 the IRS made employer-based healthcare exempt from taxation. That made health insurance cheaper through employers than otherwise.
So then many employees got health insurance, but that left the unemployed, the self-employed, part-timers and many others uninsured until the Affordable Care Act (ACA) of 2010 expanded coverage.
But even with the ACA and before the pandemic, well over 8% of Americans (27.5 million) had no health insurance whatsoever. The fraction of uninsured and poorly insured is far greater now.
Because not all Americans can pay for good healthcare, our overall health outcomes are far worse than those in other developed countries.
Even before 100,000 Americans died this year due to COVID-19, average life expectancy in the U.S. was far below that of most developed countries. We rank 26th among the 36 developed nations of the Organization for Economic Cooperation and Development (OECD).
Our infant mortality ranks us 33rd out of the 36 nations in the OECD.
Yet for those miserable health outcomes, Americans pay far more than any other nation. In fact, we spend 17% of our GDP, more than twice the OECD average.
Our economy is now in serious trouble, and it takes healthy people to make a healthy economy. The present U.S. health insurance system is expensive, hard-hearted and soft-headed.
What would be the best alternative to health insurance that is chosen and provided by employers? Possible options include the following:
1) Single-payer universal government-run healthcare as provided in Canada and Scandinavia.
2) Single-payer universal government health insurance as in France and Japan — some improved variant of “Medicare for all.”
3) Universal private health insurance purchased from competing health insurance companies, with government insurance for those who need it, as in Germany and Turkey.
4) Universal private health insurance purchased from competing health insurance companies, with firm government regulation, as in Israel and Switzerland.
5) Some mix of the above options, perhaps a greatly improved and universal version of what is now allowed under the badly crippled Affordable Care Act.
In the June primary election and in the November general one, we should vote for candidates willing to consider something other than our present problematic dependence on employer-based health insurance.
We can and must do better.