Labor Day: The Role of Employers (or not) in Health Insurance

Employees in Chicago and around the country are celebrating Labor Day, while their global colleagues celebrate the International Workers’ Day on May 1. And, unlike nearly 160 million Americans, they don’t depend on their employers for health insurance. At 18 percent of GDP, employers know that the cost of health care in the U.S. is unsustainable. They may be ready for a world in which they aren’t responsible for health insurance. (1)

Why might it be time to dismantle employer coverage? Evidence that employer coverage may be failing American workers includes benefit reductions, limited networks, fewer options, and rising costs:

  • In 2017, a family’s total health insurance costs (premium plus out-of-pocket expenses) was $7,965 or 14 percent of median household income ($57,652). In 2012, it was 12 percent.
  • During this five-year period, the amount that families spent increased by 30 percent, while the amount that employers spent increased by 16 percent.
  • Median household income increased 9 percent during the same period, which means salary increases suffered at the expense of health insurance. (2, 3)

What happens when an employee doesn’t have employer coverage? Business leaders illustrate the complexity of employer coverage and the role of government programs in the U.S.:

  • Mr. Bezos and his family may qualify for Medicaid if he was a low-wage worker at Amazon.
  • Mr. Buffett may make a Medicare choice every year even as he works at Berkshire Hathaway.
  • Mr. Dimon may need an Obamacare plan if he retires from JPMorgan Chase before turning 65.

Which country serves as a model where employers have no role in health insurance? Switzerland, which has one system for everyone; it doesn’t have different programs for the elderly, poor, or employed. All Swiss must have health insurance. They buy it during annual enrollment (November) on an online exchange and choose from private insurers with private providers. Switzerland spends only 12 percent of GDP on health care. (1)

When employees in the U.S. return to work after the holiday, many may have enrollment materials from their employers waiting for them. They may be unhappy. But in the meantime, they are Mastering Health Insurance.

Source: (1) OECD; http://apps.who.int; (2) Peterson-Kaiser Health System Tracker; (3) US Census Bureau: American FactFinder