Health Insurance in the United States
Health insurance protects against illnesses, injuries, and other out-of-pocket expenses. Health Insurance One of the big costs in any household budget is health care. Health care can be very expensive and unaffordable. Health care is so expensive because illness can happen so quickly and unexpectedly. It is vital that if over the course of your life you have been witting any fortunes, you also have some personal liability. Extended coverage on just your house seems ever so logical, but not all insurance is held at the same qualification and rate.
The necessity of health insurance is a common sense upon reflection. The entire cost of healthcare in the United States is currently at $4 trillion annually, which is double the total annual GDP of Argentina, France and Canada. Many predict that it will grow as the population ages. In order to manage this cost growth, the broadening reach and ever-evolving technologies of health insurances companies come to the rescue.
Why is health insurance still linked to employment in the United States?
It’s an accident of history – from WW II. At that time there was a huge shortage of men (duh) and in order to keep prices from skyrocketing – the Government froze wages – but said employers could use other mechanisms to attract and retain key talent. That mechanism was perks and benefits which included health.
In that regard, the U.S. is the only country where health insurance is linked to employment – but it is changing – and probably faster than you realize.
In that regard,
If you look at the benefits through the decades since WW II – they’ve gone from all inclusive (dental, vision, mental health) to less …. and less.
Many employers are already moving away from a “Defined Benefit” model to a “Defined Contribution” model (which puts the employee on the hook for more costs over and above the fixed employer “contribution).
Additionally, many health benefit plans are also moving to HDHP (high-deductible health plans) whereby the employee is on the hook for more and more direct costs (via higher deductibles).
In 2013 – for the first time in their company history – Microsoft made employees contribute to their health coverage. Prior to 2013 – healthcare (and many other benefits) were 100%.
All of which means that the long term trend of “employer sponsored” health coverage is facing lots of downward pressure.
The ACA (Obamacare) is a step away from employer sponsored health benefits in 2 ways:
1. Creates an active ‘marketplace’ nationally where individuals (and families) can shop and buy health insurance (no employer allowed).
2. Tax so-called “Cadillac” plans that some employers issued as an employee benefit
Why is it so normalized in the US for health insurance to be tied to one’s job?
It is a quirk of WWII employment. Men like Henry Kaiser needed to keep his workers healthy if they were going to get the ships built on schedule to support the war effort, so he started opening infirmaries on the premises for employees. That soon got extended to the dependents of the employees, and other businesses followed suit because it was a wise thing to do.
After the war, many countries had to rebuild from the ashes, creating new governmental structures in place of the royalty or strong-man governments of pre-war. Many of those countries decided that health was a human right and that governments were responsible for protecting the health of the citizenry. The USA, being the Big Winner of WWII, was not on its knees and was experiencing a Baby Boom, so employers, pressured by unions, started providing health care, but as a private market solution. And it became a perk of employment. Times change and that model is outdated, expensive, and mostly broken. The USA needs to provide Universal Health Care to all residents.
Should healthcare insurance be tied to employment?
Healthcare should absolutely not be tied to employment.
If healthcare is tied to employment, then anyone who is between jobs—a situation which happens to pretty much everyone at some point—is out of luck when it comes to getting any sort of treatment. It means that losing your job could literally be a death sentence.
Secondly, tying healthcare into employment places a heck of a lot of burden on employers. Employers typically have to pay about $10 per hour per employee for healthcare, on top of wages. This is a pretty heavy burden for most companies. Companies respond by not hiring people full-time, by taking away sick leave, and in general by being shittier to their employees than they should be.
If people could get medical care easily regardless of where they work or what insurance they have, which employers didn’t have to pay for, people would be healthier in general, and companies would also be freer to both treat their employees better and innovate more.