By Hubert Janicki
United States Census Bureau, February 2012
• The likelihood of employment-based coverage declined from 64.4 percent (± 0.5) in 1997 to 56.5 percent (± 0.5) in 2010.
• In 2010, 71.1 percent (± 0.5) of employed individuals aged 15 and older worked for an employer that offered health insurance benefits to any of its employees.
• 42.9 percent (± 1.8) of individuals who did not complete high school worked for an employer that offered health insurance to any of its employees, compared with 78.9 (± 0.5) percent for individuals with a college degree.
• Of workers aged 45 to 64, 75.7 percent (± 0.7) worked for an employer that offered health insurance benefits, compared with 60.0 percent (± 1.4) for workers aged 19 to 25.
• Among married couples with only one member employed in a firm that offers health insurance benefits, 68.7 (± 1.7) percent provided coverage for the spouse.
By Don McCanne, M.D.
The Affordable Care Act was designed to avoid disruption of employer-sponsored health plans since employer plans covered the largest number of individuals and employer contributions to their health plans provided the largest source of health care funding in the United States.
Taking advantage of these funds that were already in place was a natural for those writing the legislation, especially since the expansion of Medicaid and the introduction of health exchange plans would require additional federal funds at a time when considerable concern is being expressed over our current government expenditures (even if the concern should be primarily about inadequate revenues instead).
This Census Bureau report adds to the data which show that employer offers of health care coverage continue to decline. It is uncertain what impact the Affordable Care Act will have on this trend since employers will face conflicting incentives for continuing coverage. It certainly will be tempting for them to discontinue their coverage, enabling their employees to enroll in the government subsidized exchange plans or Medicaid.
The impact of these subsidies will have to be weighed against the loss of deductibility for employer-sponsored plans, though that theoretically should be neutral to the employer as forgone wages for health benefits are then paid to the employees, and it would be the employees who would have a higher tax obligation. (Do you believe that the behavior of employers actually would follow the common wisdom of the economists in this matter?) Also, larger employers would have to weigh the impact of the assessment (penalty, tax, or whatever) for not providing coverage to their qualified employees.
There is a wide range of opinions on this matter, but it is likely that there will be little tendency to increase the numbers of individuals with employer-sponsored coverage. In contrast, it is more likely that other employers will follow the lead of those who early on decide against providing coverage as they play games with the rules that determine whether there would be penalties or how much they would be.
Also employers will likely continue with the current trends to shift more health care costs to their employees, with the alleged premise that it would make them better health care shoppers. They really don’t care about their employees’ shopping habits. Employers are adopting these plans for one reason only. High deductibles and other innovations reduce their costs – the employers’ costs – for these plans, with the trade off of increasing costs for employees who actually need health care.
It seems clear that more people will either be pushed into the underfunded Medicaid program or the underinsurance plans of the exchanges, or they simply will go uninsured.
The Affordable Care Act isn’t fixing our system, and employers understandably are losing their enthusiasm for filling the gaping void in the adequacy and allocation of our inefficient private health plans. You would think that employers would be ready to get on board with an improved Medicare that covers everyone. It would certainly get rid of one big headache for them.