Although many may think today that we have always had employer-sponsored health insurance (ESI) in this country, that is not the case. While some companies offered coverage in the 1930s, the basic concept gained momentum only after the start of World War II. The war effort required a rapid buildup of industrial capacity in the face of a severe labor shortage as many men went off to war. Employers needed a healthy workforce, and needed to compete for workers. Federal wage and price controls made it difficult for them to offer higher pay, so that ESI became an important recruitment tool. Employers were helped by an IRS ruling that made their costs of ESI tax-deductible; these benefits also were not taxable for employees. (Somers, AR, Somers, HM. Health and Health Care: Policies in Perspectives. Germantown, MD. Aspen Systems Corporation, 1977, pp 109-11)
We have had about a 75-year experiment with ESI, but its track record is one of continued decline over the last 30 years -- fewer people covered, less coverage for more costs, and less value of that coverage. ESI was more an accident of history than a well-planned financing system for health care. Today, rapidly accelerating costs are the Achilles heel for ESI, both for employers and employees, as they are for the entire market-based 'system' itself.
ESI arose at a very different time than today. Beyond the labor shortage, American business was dominant with little concern about foreign competition, and labor unions were strong. Many workers could reasonably expect to hold their jobs for their working life.
But those days are long gone. Most workers these days have multiple jobs, even careers, over their working years. By 2002, only about one-half of employed men or women could claim to have held their job for ten years. (Tejada, C. A special news report about life on the job--and trends taking shape there. Wall Street Journal, September 25, 2002: B5) Loyalty between employers and employees has dropped way off in recent years, part-time workers are not eligible for benefits, and union membership hovers around 10 percent of the workforce.
These markers show a long decline of ESI, as well as the decreasing benefits to enrollees:
Beyond the increasing unaffordability of ESI for employees, employers -- big and small -- have the same problem with no end in sight. General Motors says it spends about $5 billion on health care expenses each year, adding between $1,500 and $2,000 to the sticker price of every car out the door. That burden is many times higher than what neighboring competitors just across the border in Canada pay for health care, rendering GM much less competitive in global markets. (Johnson, T. Healthcare costs and U.S. competitiveness. Council on Foreign Relations, March 23, 2010) Small business (with fewer than 100 employees), accounting for about 40 percent of the private U.S. workforce, cannot keep up with the growing cost of ESI coverage. The small employer market has been one of the most profitable for private insurers, with premiums climbing by 74 percent between 2001 and 2008.
The so-called health care reform legislation, the Affordable Care Act of 2010, will not fix this problem. Having handed over a combined employer and individual mandate to the private insurance industry, with minimal regulatory clout, the bill (if and when it is implemented) lacks any semblance of cost containment measures. Federal waivers already give employers whatever they want, as illustrated by a recent HHS ruling that allows McDonald's Corp. to keep its very low limits of annual coverage of just $2,000 a year. (Adamy, J, Johnson, A. Rules eased for some health plans. Wall Street Journal, November 23, 2010: B1) Whereas President Obama promised that the average American family would save $2,500 a year on health insurance premiums, the Congressional Budget Office later projected that their cost would only increase. (Hemingway, M. Obama promised $2,500 health care savings; CBO says plan is $2,300 price increase. Washington Examiner on line, March 10, 2010)
M. Obama promised $2,500 health care savings; CBO says plan is $2,300 price increase. Washington Examiner
Adding all of this up, we can only conclude that employer-sponsored health insurance, and the overly expensive, wasteful private insurance industry upon which it is based, is in its death throes. As the Vice chairman of Ford Motor Co. said in 2004: "Right now the country is on an unsustainable track and it won't get any better until we begin -- business, labor and government in partnership--to make a pact for reform. A lot of people think a single-payer system is better." (Downey, K. A heftier dose to swallow. The Washington Post, March 6, 2004). Some 50 years ago, Walter Reuther, as the national president of United Auto Workers, saw the future this way:
"When American corporations reached the point where they couldn't make their business more efficient without making it less profitable, when their dependency ratios soared to unimaginable heights, when they got tens of billions behind in
their health-care obligations, when the cost of carrying thousands of retirees forced them to stare bankruptcy in the face, they would come around to the idea that the markets work best when the burdens of benefits are broadly shared." (Reuther, W. as cited by Gladwell, M. The risk pool: What's behind Ireland's economic miracle and GM's financial crisis? The New Yorker, August 28, 2006, p 35)
We have to move beyond denial of this problem, and rein in markets that fail the public interest. We can no longer afford ESI or the private insurance industry. Unless we move past political gridlock on this big issue toward a new partnership between labor, business and government, they can bankrupt us all!
There is an answer, of course, in plain sight -- not-for-profit, improved Medicare for All, funded by broadly shared progressive taxes that cost patients, families and business less than they are now paying while assuring universal coverage in a less bureaucratic and more accountable system.
Author of Do Not Resuscitate: Why the Health Insurance Industry is Dying and How We Must Replace It and Hijacked! The Road to Single-Payer in the Aftermath of Stolen Health Care Reform (Common Courage Press, 2008 and 2010)
To buy a book from John Geyman visit: http://www.copernicus-healthcare.org
Linda Bergthold: Medicare Open Enrollment Time -- Have You Been Dumped?
The biggest problem is an out-of-control healthcare delivery system with TOO MANY hands in the pot.
The other problem is a U.S. citizenry that ignores the reponsibility for maintaining a healthy body and mind.
When this country decides to get serious about healthcare, we will re-structure our delivery system.
Why do we need so many third, fourth, fifth, etc. parties in the medical care system? It just makes costs higher and the service much more inefficient.
Though I disagree with your conclusion, I appreciate your input on this issue. Then again even Milton Friedman said the singe payer system would be cheaper than the system we have now. I just am worried about quality in that case and I prefer free markets.
Health insurance providers are often chosen on a cost criterea not quality. The healthcare industry dictates the standards of care needed by what it choses to make available. Oponents of national health care remain convinced that whatever they have now is the best of all possible worlds. Promoters of the status quo prefer to ignore the deteriorating quality of the healthcare available and the soaring costs and rant about a nebulous healthcare "market." Try to disabuse them of their fantasy.
While I agree wholeheartedly with the author's conclusion I'm afraid any reform of that kind is impossible under our current system of government. We need to first follow through on initiatives to decouple corporations from political influence. The last health reform was a prime example of the deletrious impact of corporations on government: we ended up with a piece of legislation almost entirely written by a health insurance lobbyist that almost everyone agrees will not control costs or significantly reform the insurance industry, and which has (sort of ) united the right and the left in their disgust over it (for different reasons of course). Rational discussions of single payer were "taken off the table" at the get go, ostensibly so as not to spark the health insurance industry into all out assault on reform, but I think you can be sure it was more than some trumped up fear of having to actually sell reform to the American public (when support for the concept of reform polled at close to 70% of the population approving), and fight the insurance industry on their record which should have been no trick at all to do, given the record high unpopularity of this industry with the public.
That's why they put the private health insurance industry on government subsidies and convinced people it was "reform".
Their business model would have put them out of business otherwise.
Privatize the profits, socialize the losses.
1) Tort reform, but ONLY if doctors are held accountable for malpractice (3 strikes and you're out?)
2) Pharmaceutical reform. The FDA should only approve drugs that are safe, effective, AND cost effective. A wonder drug that costs $20k / year for life is no wonder drug, because it'll bankrupt the whole system. Send out the word to big pharma that the FDA will not approve drugs that are not cost effective, no matter how good they are.
3) If you do have a wonder drug that is expensive, the government should "buy it" and put it in the public domain immediately. This can get tricky, so I don't advocate it too much, but it is a possible solution, if used sparingly.
4) Time to understand that death is part of life, and that death is not a failure of the system. Nobody gets out alive, and quantity is not necessarily better than quality.
5) On that front, the greatest freedom that should be allowed to people is the freedom to die when they choose. If quantity is your thing, great. If quality means more to you than quantity, that should be allowed too. Lets act like adults and allow people to make extremely personal, adult decisions.
I think it's pretty clear that many people riding the for-profit healthcare sector gravy train *don't* care that the system they are cashing in on is letting people die. Watching insurance executives in the Frontline documentary "Sick Around America" simulate concern over the tribulations of the uninsured, the underinsured, and the rescinded was an exercise in cognitive dissonance.
I think it's also pretty clear that Big Health's PR operatives have managed to draw out and inflame the most viciously and shortsightedly selfish instincts of a certain part of the electorate. Witness the crowd cheering to let a hypothetical uninsured man die at a recent Republican debate.
But I believe a majority of Americans still care whether other people die from lack of medical care. And I think even *more* will care when they realize that cost-effective universal care -- like Improved Medicare For All -- would be both *cheaper* and *better* than what they have now. (Unfortunately, the commercial news media simply haven't disseminated that information. I'm pretty sure that this curious omission can be directly traced to the billions of dollars in direct-to-consumer advertising revenues they receive each year from pharmaceutical companies, specialty hospitals, and MRI manufacturers. As I've said before, a huge advertising budget doesn't just buy you a lot of advertising -- it buys you friends in the news division, as well.)
The only rationale was that Big Insurance/Healthcare are corporations just like they are so they were not willing to rock the boat.
What does the US Chamber of Commerce have to say? Let me guess, 'Health Insurance for employees is too expensive for business. We will stop providing it.'
2) Reduces competition from small businesses for good workers if the small businesses have to struggle to provide benefits for workers
- Martin Luther King, Jr.
EVERYONE should be in a single insurance pool, whether we go with Medicare for all or some perversion of it that hands our cash to private insurers. It is unconscionable that people are punished - with often very dire consequences - for freelancing, being entrepreneurs, caring for children or otherwise managing their lives in the way they want, outside the corporate yoke.