Column: Let employers offer insurance
Most Americans are pleased that Congress is abandoning its ill-fated health care reform push. Just 29 percent want lawmakers to “continue working on a new healthcare bill,” according to a new Reuters poll.
The lack of enthusiasm for a major overhaul shows that Americans are broadly happy with the current health insurance system. There are certainly problems with the Affordable Care Act exchanges. But these issues only affect about 12 million people who buy insurance in the federal and state exchanges.
By contrast, about 177 million Americans receive health coverage through their employers. Employer-sponsored insurance has proven a cost-effective, innovative way to deliver high-quality coverage. It’d be foolish to undermine — or even abolish — this pillar of the American health care system. Yet that’s what many partisans on both the left and the right want to do.
On average, employers pay over 70 percent of premium costs for any workers who sign up for insurance through work. This financial assistance makes employer-sponsored coverage a great deal for virtually all workers, no matter their age or health status. So most workers enroll, resulting in a balanced risk pool with a mix of healthy and sick people.
This balanced risk pool means costs stay predictable from one year to the next. This predictability, in turn, keeps premiums steady and affordable. In 2016, average employer-sponsored family premiums rose by only 3 percent. And the average individual premium remained flat.
By contrast, the average premium for a mid-level individual policy on the ACA exchanges rose by 10 percent in 2016. And rate hikes averaged about 25 percent in 2017.
Why did exchange plan premiums rise so much faster? Well, without employers incentivizing folks to sign up, lots of healthy people stayed away from the exchanges. The people who signed up were sicker than insurers had predicted. Insurers responded by hiking premiums and scaling back the quality of coverage.
Despite the perils of the individual market, partisans on both sides of the aisle want to tear down the employer-sponsored system.
Many on the right have long sought to tax employer-sponsored health benefits. They argue that the current tax code, which exempts health benefits from taxation, incentivizes employers to sponsor lavish health packages that drive up medical costs.
Ending the “employer exclusion,” as it’s known, would amount to a massive tax hike on firms and workers. Many companies would offer far less generous benefits or stop offering coverage altogether.
The left’s ideal of Medicare for all, meanwhile, would do away with the entire employer-based system. Indeed, one of the selling points of a single-payer model, according to Sen. Bernie Sanders, is that it “finally separate(s) health insurance from employment.”
A government takeover of medicine would eliminate innovation and dynamism in the health care marketplace.
Consider a new report from the Business Roundtable highlighting some of the creative strategies top American businesses employ to contain healthcare costs.
Bank of America provides financial incentives — totaling as much as $1,000 a year — for workers and spouses who complete voluntary health screenings. The firm also has helped 74,000 employees connect with a health coach or nurse to manage their chronic conditions or receive other wellness support.
Employees of Huntington Ingalls Industries, a shipbuilding company, have access to health clinics on or near many of the firm’s shipyards for just $15 a visit. In the first half of 2016, these clinics processed more than 10,000 visits.
Many firms have established wellness programs to keep folks healthy, thereby averting costly diseases and lost productivity. Businesses can recoup $1.76 for every dollar invested in wellness programs, according to a recent study from economists at Washington University in St. Louis, the University of California, Los Angeles, and UC, Riverside.
Such corporate wellness initiatives can help reduce the prevalence of chronic diseases. Without better prevention efforts, chronic conditions will cost the United States a cumulative $42 trillion by 2030.
Employer-sponsored insurance offers Americans quality coverage while keeping costs in check. Lawmakers eager to improve our health system should be careful not to destroy what’s working.
Kenneth E. Thorpe is professor of health policy at Emory University and chairman of the Partnership to Fight Chronic Disease.