Republicans battling the Affordable Care Act had better come up with some good alternatives, because even without the ACA, there’s a real threat to the system we’ve had since the end of World War II. Employer-based insurance doesn’t work when fewer and fewer of us are employed.
The Baby Boomers are retiring, the number of working-age Americans on Social Security Disability Insurance is at an all-time high, and those recent declines in the unemployment rate are mostly due to people who have stopped looking for work. According to the Bureau of Labor Statistics, the workforce participation rate is at a 35-year low.
Now add to these trends the fact that the ACA provides incentives for employers to push workers onto the ACA exchanges, and the end of employer-based insurance is that much more likely.
“The road to comprehensive health care reform will be littered with casualties. One of them might be employer-provided health coverage,” writes John Wasik in the Fiscal Times. “A recent report by S&P Capital IQ, the financial research firm, found that the Affordable Care Act (ACA) is providing employers incentives to shift employees into federal and state-offered insurance exchanges. The potential savings to corporate America could be up to $3.25 trillion.”
Wasik explains that employer-based insurance is a relatively new thing. Many employers began offering insurance when the federal government offered them a tax break to do so.
“The health-insurance write-off came about as an indirect way to incentivize employers to keep wages stable after World War II,” Wasik notes. “Fringe benefits such as pensions and health plans took on a life of their own as employers increasingly upped the ante to attract and retain desirable employees.”
The ACA upends this system. Because it includes a “Cadillac tax” on more generous health insurance policies, government is now providing disincentives to employers who offer health insurance.
Already, some major employers are responding.
“Last year, IBM announced that it would move 110,000 employees from its corporate health plan into a private exchange, where they would purchase a private policy with a company payment,” Wasik reports. “The drugstore chain Walgreen’s is doing the same with 120,000 of its employees.”
This is not an unforeseen or even unintended consequence. The ACA’s chief architect, Zeke Emanuel, predicted “the end of employer-sponsored insurance” in a recent book.
“By 2025, few private-sector employers will still be providing health insurance,” he claims. He expects those “few” to offer coverage to less than 20 percent of Americans.
Where is this leading? Without other (and better) options, it’s leading to a single-payer system. It will start with the need for a “public option,” which would pool the non-poor unemployed (or those whose employers no longer offer insurance) and work like a “Medicare For All.” That was part of the ACA initially, but was ditched because it proved too unpopular.
But be ready for a return of the public option.
This is why Republicans must be ready with better options. All the trends say employer-based insurance is gravely ill, and the prognosis isn’t good.