05/05/2009 12:58 pm ET Updated May 25, 2011

The Erosion of Employer-Sponsored Health Insurance

by Faiz Shakir, Amanda Terkel, Satyam Khanna, Matt Corley, Benjamin Armbruster, Ali Frick, Ryan Powers, and Igor Volsky

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When Chrysler filed for Chapter 11 bankruptcy on April 30, the company granted the United Auto Workers union a 55 percent stake in the restructured firm. As a result, the Voluntary Employee Benefit Association (VEBA), the union's health care trust established by the Big Three automakers in 2007, "will own most of Chrysler's assets." But as Ken Terry of BNET Healthcare explains, the arrangement represents "another blow to the tottering system of employer-based insurance." The union "will accept this equity in lieu of $5 billion in cash, or about half the amount that Chrysler promised to invest in the VEBA," Terry writes. "If the ailing automaker gets dismembered in bankruptcy proceedings, or fails to recover in coming years, its retirees could lose all or part of their healthcare benefits." Nationally, the percentage of Americans "under the age of 65 with employer sponsored insurance declined to less than 63 percent in 2007, from more than 67 percent in 1999," and employers are now reporting that they plan to shift more health costs to employees. According to a new survey of businesses, "one-fifth of the companies said they planned to add or switch to a high-deductible or 'consumer-directed' health plan with a health savings account, perhaps doubling the percentage of employers who offer such plans." As the Wall Street Journal's health blog observes, "A big reason is that employers say the recession isn't just crimping business; it's also expected to drive up their health care costs. Those surveyed said they expect their health benefit costs to spike an average 7.4 percent this year (compared to the 6 percent increase employers originally forecast)."

Employers have shed 5.1 million jobs in the last 15 months, and approximately "2.4 million workers have lost the health coverage their jobs provided since the start of the recession." In fact, a new analysis of data from the U.S. Census Bureau and the Bureau of Labor statistics by the Center for American Progress concludes that the worst losses have been in the first three months of 2009, when more than 1 million workers lost health coverage. In March alone, more than 320,000 Americans lost their employer-provided health insurance, "which amounts to approximately 10,680 workers a day." Manufacturing, construction, and professional and business services accounted for three-quarters of total jobs lost, while employees in the durable goods manufacturing sector bore "the greatest burden of the losses in coverage with approximately 733,600 workers becoming uninsured since December 2007," the report concluded. Still, estimates of the rise in the number of uninsured "do not reflect the full extent of health coverage loss due to lost employment." As the report explains, the numbers represent a "conservative estimate of the number affected, since it leaves out spouses and children who may have also lost coverage as a result of a spouse or parent losing their jobs."

Overall, the number of Americans without insurance has increased 13 percent since 2007, "the largest two-year leap since the last effort at national health reform in 1994." States like North Carolina, Indiana, and Nevada experienced some of the highest increases of the uninsured. The growing national crisis has led a diverse group of stakeholders and interest groups to advocate for expanding health insurance coverage to all Americans. Yesterday, John Podesta, President and CEO of the Center for American Progress Action Fund, hosted a teleconference with Senate Finance Committee Chairman Max Baucus (D-MT), and President and Co-founder of Doctors for America Dr. Vivek Murthy to announce new efforts by Doctors for America -- a grassroots organization of 11,000 doctors from all 50 states -- to amplify physicians' voices in support of health care reform. "What's a key priority for us is that whatever plan is put forth really does improve access for patients and improve choice for patients," Murthy said on the call. The group will "work to convey the ideas and experiences of physicians to achieve healthcare reform based on four key pillars: affordable coverage, expanded access to care, high quality care, and practice environments that allow physicians to focus on patient care."

But while health care providers are developing solutions for expanding access to coverage, the Republicans are busy vilifying President Obama's proposals. On Saturday, Republican Party leaders Rep. Eric Cantor (VA), former Florida governor Jeb Bush (R), and former Massachusetts governor Mitt Romney (R) participated in a pizza parlor town hall in Arlington, VA to launch the National Council for a New America. The Council, an effort to rebrand and revive the GOP, was established by Cantor to "duel with the Obama administration in policy areas" where Republicans have a "track record." After almost 40 minutes of speeches, including several reminders that Republicans should not be "nostalgic about the past" -- the speakers opened up to questions from the audience. Ed McKee, the owner of the pizza parlor, asked what Republicans would do to reform health care, citing his own business' struggle to deal with "health insurance rates," which recently "went up 34 percent." Responding to McKee's question concerning the dramatic health care cost hike, Cantor said "that should be a sure sign we ought to be promoting anything that can try to bring health care costs down." But rather than offering any ideas or policy plans for addressing health care costs, Cantor launched into a set of attacks on the health systems in the UK and Canada, saying any reform should not reflect a "government takeover." The National Council's policy paper on health care is similarly vague and lacks a single policy plan.