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- Health insurance is one of the most highly sought-after benefits by employees, but it is also the most expensive for employers.
- A study by the Urban Institute reported that 83.1% of all employees were offered health insurance through their companies.
- Collectively, employers are the largest purchaser of healthcare in the country, providing benefits for over 153 million people.
It’s well known that the issue of healthcare coverage in America is highly debated. High costs of care and lack of insurance coverage for low and middle-class families have led to social and economic discrimination in healthcare services.
Almost half (45%) of U.S. adults ages 19 to 64, or more than 88 million people, were inadequately insured over the past year, meaning either they were uninsured, had a gap in coverage, or were underinsured.
With the high cost of medical care in the country (U.S. healthcare costs were approximately $3.2 trillion or nearly $10,000 per person on average in 2015), it’s no surprise that health insurance is one of the most highly sought-after benefits by employees. Many employers use benefit packages—including health, vision, and dental coverage—to attract and retain employees.
The question remains: What do American workers do if their employers do not provide health coverage?
No law directly requires employers to provide healthcare coverage to their employees. However, the Affordable Care Act imposes penalties on larger employers that fail to provide health insurance.
Under the ACA, employers with 50 or more full-time employees must provide health insurance to 95% of them or pay a penalty to the IRS.
As a result, large employers have a strong incentive to provide health coverage. Employees actually do not have the right to demand healthcare under the ACA.
The majority of American workers have health insurance coverage through an employer. A study by the Urban Institute reported that 83.1% of all employees were offered health insurance through their companies.
Fortunately, in many countries where companies do not provide health coverage for their employees, there is universal health insurance, such as the National Health Service in the U.K.
The United States remains the only country in the developed world without a system of universal healthcare.
According to the 2018 U.S. Census, 8.5% of Americans (27.5 million people) do not have health insurance. The ACA, passed in 2010, significantly cut the number of uninsured – which once stood at 46.5 million.
Health coverage under the ACA plans is not free though, nor is it very affordable, in actuality. The average cost of an Obamacare plan ranges from $328 to $482 per month.
Average annual premiums for family coverage are also increasing, outpacing inflation and workers’ earnings.
For those who cannot afford Obamacare, there is Medicaid, which is the nation’s public health insurance program for people with low income.
The Medicaid program covers 1 in 5 Americans, including many with complex and costly needs for care.
There are still those who cannot afford Obamacare but do not qualify for Medicaid who slip through the cracks.
Millions of Americans still struggle to pay medical bills and face the choice of either financial ruin or going without the healthcare they need.
If the government of the United States won’t provide free health coverage for all, and if an employee’s company doesn’t provide it either – where exactly does that leave American workers?
In the future, will free health insurance be universal or will workers have to increasingly rely on their employers to provide it?
The union of employment and health coverage contradicts the principle of healthcare as a human right, treating it rather as a privilege conferred upon those who are well-employed.
From this contradiction, the first government-funded healthcare programs were created: Medicare, Medicaid, and CHIP.
It’s unclear whether the U.S. will ever have true, national, free health coverage. People can hope that the government funded programs currently in place will be able to expand in the future to include those who fall through the coverage gaps.
If “Medicare for All” became a reality, employers would be able to stop spending such a large amount of their budget on health coverage, and instead redirect it into employee’ wages.
A fundamental reform like Medicare for All would provide a counterweight to the substantial market power that keeps prices high and that is currently wielded by many key players in the healthcare sector, such as insurance and drug companies.
Implementing a national health system could also have great success in containing healthcare cost growth. This could provide relief from many of the ways that rising health costs squeeze family incomes.
It would also lead to a much better functioning labor market in many areas. Job quality would increase, job switching would become less stressful, better “matches” between workers and employers would boost productivity, and small businesses would be much easier to launch, according to the Economic Policy Institute.
Once healthcare becomes too expensive for either companies or individuals to afford, there might be more of a push towards a national healthcare system.
Would companies save money if the U.S. had free universal healthcare?
The Center for American Progress estimated that the lack of health insurance in the U.S. costs society between $124 billion and $248 billion per year. Shortened lifespans and the loss of productivity are observed due to the reduced health of the uninsured.
Collectively, employers are the largest purchaser of healthcare in the country, providing benefits for over 153 million people.
While health insurance is the most sought-after benefit among workers, it is also the most expensive.
Americans pay more than twice as much per person on total healthcare spending and on prescription drugs in comparison to other developed countries. This spending totals nearly 18% of the economy.
Between 2008 and 2018, premiums for employer-sponsored insurance plans increased 55%, twice as fast as workers’ earnings (26%). Over the same time period, the average health insurance deductible for covered workers increased by 212%.
An average employer-sponsored family health insurance policy now exceeds $28,000 per year, with employers paying about $16,000 and employees paying about $12,000.
Not only would society and the economy suffer less due to the implementation of universal health coverage, but companies would have less expenditures if they didn’t have to cover their employees’ health insurance.
Some companies have had to look for solutions to reduce their health insurance expenses, such as increasing deductibles for their employees in order to lower the company’s premiums. Many companies also offer wellness programs, because healthy workers have fewer health insurance claims.
While these solutions may be helpful for companies, employees still have to pay (sometimes very expensive) deductibles for their healthcare.
If companies choose to provide health insurance, how will this impact recruiting minorities into the workplace?
Health insurance coverage is uneven; minorities and deprived families disproportionately lack it.
In 2020, almost 20% of the Hispanic population didn’t have health insurance. 11% of Black Americans had no health insurance, and White Americans had a below average rate of 8.3%.
While the majority of Black Americans have health coverage, they are also the group most likely to fall into the coverage gap, meaning their earnings are too high for Medicaid eligibility, but not high enough to take advantage of subsidies under marketplace plans.
This is where company health insurance is essential.
Companies that provide comprehensive health plans can also greatly increase their hiring capabilities and company attractiveness – especially to diverse talent.
Employers that provide comprehensive health insurance plans will have a better chance of recruiting minorities into the workplace.
“We can improve health outcomes for BIPOC, increase their life expectancies, and reduce the racial and ethnic disparities in care by restructuring health coverage sources,” according to the American Bar Association.
How do freelancers and contractors get health coverage in the U.S.?
If you’re self-employed, you enjoy benefits such as flexibility and a better work-life balance. But you also have to manage all aspects of your benefits yourself—like health insurance.
Contractors can get health coverage a few ways:
- Buy it in the Health Insurance Marketplace, which is operated under the provisions of the Affordable Care Act (the lowest-cost bronze tier premium is $328).
- If you recently left a position, you may be eligible for COBRA coverage for up to 36 months, or you can look into some professional associations.
- See you if you qualify for your state’s Medicaid (a household of one earning less than about $17,000 can qualify).
- If your spouse or domestic partner works and has coverage through their job, you may be able to join their plan.
Studies predict that the number of gig workers will increase in the future, so the healthcare system will see an increase in people buying their own plans.
No healthcare plan is perfect, and the American healthcare system is very flawed – but this may change in the future as workers begin to want more affordable healthcare and less deductibles, and as employers wish to save money.
