It’s Time to Kick Employer-Sponsored Healthcare to the Curb

Business Cheat Sheet reports:

“A great number of people in the United States have grown accustomed to having their employer pay for, or at least subsidize their healthcare costs. That usually takes the form of employer-provided health insurance plans, which have become a staple of most compensation packages for full-time employees that are working in positions that require even menial amounts of skill — and shutting out, for the most part, unskilled or low-wage workers. On the surface, it is a bit odd that we rely on our employers to pay for our health insurance. Yet, it’s become the norm, and one of the many reasons the U.S. healthcare system, as a whole, is so complicated and for lack of a better term, screwed up.

Why is it that we have employer-sponsored healthcare plans as a part of our compensation packages, anyway?

The answer isn’t exactly clear. In fact, it may be one of the more ambiguous caveats in all of American business. There has been plenty of research and a ton of papers published regarding the subject as a whole. NPR dug into the topic and traced things back to the 1920s, when hospitals were attempting to find ways to attract patients who weren’t on the verge of death. By finding ways to allow people to pay a little bit for healthcare every month — in the same manner they might pay for cosmetics — eventually, a prototype of the modern insurance system was born. A group of schoolteachers in the Dallas area became the guinea pigs for the system, and the ultimate outcome became what is known today as Blue Cross.

After that, the system spread throughout the states and legislation was proposed to make coverage tax-free. Since everyone needs medical in some form, employers found that by providing healthcare for their employees in the form of tax-free compensation, they could save money. After all, those employees were going to be spending their money at the hospital anyway, so they might as well find a system that saves both employees and employers money.

Obviously, the system has become much more complicated and convoluted over the years. Today, many people are shut out of the healthcare system altogether due to incredibly high prices and unaffordable premiums offered by insurance companies. Millions of people aren’t offered insurance as part of their compensation packages, and as a result, need to figure things out on their own. The Affordable Care Act took aim at some of these issues, although it did so in a pretty abstract and roundabout way, and ultimately became a windfall for insurance companies.

So what about the system itself? Is it outdated and ineffective? Recent developments have many people thinking so.

To most people outside of the United States, the idea of having your employer supply your health insurance is fairly abstract in the first place. The main issue is that America is the only world power that doesn’t have a publicly-financed universal healthcare system, which is another debate entirely. But without such a system in place, things can get weird.

That weirdness has really reached a crescendo as of late, particularly following the Supreme Court decision mandating that a for-profit corporation — in this case, Hobby Lobby — can actually mandate the types of healthcare provisions its employees receive, all based on the religious beliefs of the company’s owners. Never mind that Hobby Lobby’s arguments were based on a stack of flawed science and misunderstood ideas, the fact that the Supreme Court ruled that an employer’s particular religious belief — which can be made up off the top off their heads, for all the Court cares — takes precedent over the medical needs of their employees.

The case in itself is ridiculous, but it brings us to one important conclusion: it looks as if the era of employer-sponsored healthcare needs to end.

It was a system that worked, in some respects, for a while. But if employers are now going to be able to pick and choose — based entirely off of how they feel in accordance with their religious beliefs — how their employees can receive care, the whole plan needs to be scrapped, or reevaluated to the highest degree. Of course, there’s also the problem of testing whether or not an employer’s religious beliefs are genuine, which was not exactly made clear in the Supreme Court’s decision. If a business decides it doesn’t believe in treating cancer because that will somehow save a few bucks, who’s to question it?

So, what can be done to supplant the system? While most people are quick to jump to an obvious solution — a single-payer system — there are market-based approaches that make sense as well. “The answer is not to start interfering with religious liberty, or engage in an arcane legal dispute about whether a private corporation is a “person,” or to strengthen mandates on employer coverage,” writes Stuart Butler from The Brookings Institute. “The correct strategy is to push forward with tax reforms and other steps that would lead to the disappearance of most employer-sponsored insurance. That’s actually something both advocates of single-payer systems and conservatives should agree on.”

It’s hard to imagine our current Congress – which isn’t willing to do anything except agree on names for libraries and other trivial matters — somehow passing legislation to allow this idea to gain traction. Our representatives have shown time and time again that they are unwilling or unable to rework the tax system in any meaningful way, and considering this approach would take widespread cooperation across the aisle, it’s unlikely to see it come to fruition.

Of course, the single-payer system that every other industrialized nation has in place is also very attractive, but the fierce resistance it would encounter from conservatives makes it even more far-fetched. It’s ironic, considering that many of the people such a system would probably help the most are the most vehemently against it.

So how do we actually see the employer-sponsored healthcare system rot away? There really isn’t an answer, but it’s clear that with the way things are going in the courts that it needs to be changed — and fast. Of course, people are always free to purchase their own insurance, but the current system also makes that a considerable financial burden. Unless politicians can find a way to work something out among their competing ideologies, we shouldn’t expect much to change. But the need for the system to evolve will become more apparent when a large employer decides that cholesterol medication or chemotherapy isn’t a part of the dominant stockholder’s belief system.