Employer-sponsored health insurance: going the way of the perm?


Anybody spending any time getting upset about the implications of the Hobby Lobby ruling is getting it all wrong.  Employer-sponsored health insurance probably won’t be around much longer.

This isn’t even one of my zany theories.  I just started Googling “employer sponsored health insurance” to learn more about it, and many of the results for that benign search term were about how Obamacare spells the end of employer-sponsored health insurance.  The articles imply that crushing employer insurance was not one of the goals of the ACA, but the reality is that all the new rules place an untenable financial burden on employers.

It makes sense.  Employer-sponsored insurance was already kludgy as hell prior to the Hobby Lobby determination.  And the Hobby Lobby case just underscores how antiquated and ill-fitting this system is now.

Employer insurance started largely during WWII as a fringe benefit to counteract wage freezes, buoyed by a tax advantage for employers enacted around that time.  It peaked in the 60s and 70s, an expansionary time in US history for both socialized services and medical patronage.  A hundred years ago, people went several years without seeing a doctor; now health services and products are a large part of our lives.

The scale has tipped, and at this point insurance plans are expected to subsidize a slew of what might arguably be only somewhat medical items and services, such as face lifts, mood elevators, and Viagra.  Which I understand is expensive for the insurer (not to mention the insured).  I read in one of these articles that employer insurance coverage and participation both decreased through the ’90s and ’00s – marking the beginning of a period of natural contraction in this “semi-socialized” type of insurance.

So this is just my observation, but it seems like just prior to ACA, our relationship to health insurance was like that classic rock song “Stuck in the Middle with You” (or more specifically, the Hanes commercial with all the thongs on the laundry line set to this song).  A giant proverbial wedgie.  We all want health insurance, and everyone seems to know that private insurance is way too expensive.  So you need your job to provide cheap group insurance.  But as long as there is some coverage, it probably does not impact your decision on where to work.  And then inevitably you are dissatisfied with it.

At the same time, it sounds like employers have been coming to resent insurance for the non-value-added cost that it is.  They could never get rid of it altogether, but they could chip away at it and prospective employees wouldn’t know until it’s too late.  The insurance at one of my jobs did not even cover annual Well Woman exam.  What’s up with that?  But I continued to work there and just paid for these services.  Then at my current job the insurance seems a little too expensive.  But I just pay for it.  In neither of these cases was I going to leave my job over it.

So there has been a tension, at least in the plans I have seen.  Your company usually only offers 2-3 plans tops, so you really don’t have much of a choice. And your company had latitude to change up the whole insurance arrangement without any employee buy-in, as illustrated so brilliantly in the Dwight clip above.  The Office really nailed it on that one.

Enter ACA.  Obamacare was ostensibly supposed to make everything better and more comprehensive, but what it did is push a teetering system to the brink.  Employers did not like paying for the optional insurance plans before, and now they are legally required to provide bigger plans than they ever had.  I don’t think corporations will have much of a chance to engage in ethical medical conflicts.  The added costs of the ACA laws will compel employers to push the costs onto the employees through the back end, or consider taking the fee instead of continuing to cover employees.

I would be more worried about what happens next.  It would be nice to think that we might all enter the private market, and a competitive environment would develop in an attempt to earn all of our business.  But the insurance industry is far too regulated to welcome competitors and a free market.  And the same Federal Government that expanded its powers enough to enact a national health tax could also take over the administration of the system that redistributes the tax money.  Especially now that the group insurance environment is sufficiently distasteful that employers might voluntarily exit the market.

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