The employer-based health insurance system in the United States has weakened over the past several years. The amount of coverage provided has dropped dramatically, and more of the burden is being shifted to the individual. The average employee under such a thought has seen their premiums go up and their coverage go down. Today such a system is coming under increasing scrutiny. The decline in the effectiveness of the system has caused policy makers to view into dramatically reforming health insurance in the United States or adopting an alternative health insurance system.
Employer-based health insurance in the United States primarily got its originate around the time of World War II. A wage freeze was established as allotment of a larger inflation control policy. This led many companies, in order to attract employees, to offer increased benefits including health insurance (Glied 38). The companies had even more incentive because the non-wage allotment of those benefits were not taxed due to a tax code that does not regard non-wage benefits as compensation; therefore, is not subject to income and payroll taxes. This tax provision was officially recognized by the IRS in 1954 (Glied 38). All of these, essentially, indirect policies led employer-based health insurance to become the most approved manufacture in the United States.
The largest decline in the number of people prescribing to an employer-based system was not seen until the 2000’s. Each year since then, it has been steadily declining. In the year 2000, the percentage of Americans that received their health insurance through an employer was 64.2%. By 2006 that had fallen to 59.7%. This decline is the considerable reason for overall increase in the number of Americans that are uninsured in the past ten years, which in 2006 stood at 47 million Americans (Gould). This figure, however, does not even address how many Americans are underinsured.
Considerable of the reason for the overall decline of employer-based health insurance (both in enrollees and in adequacy) has been in the private sector. The example of General Motor’s health insurance idea for their workers illustrates this. When GM decided to provide health insurance benefits and pension plans, they had assumed that their profits would remain staunch, and the label of those health benefits would not increase, but they did. The cost of health care rose at a rate three times faster than the rate of inflation, contributing to the astronomical cost increase for GM to provide health insurance to their employees (Herrick).
In addition to changes in the private sector, there were important policy changes that affected the decline in the viability of the employer-based system. One of these policies that contributed to the decline was beneficial tax breaks given to companies that provided health benefits. An estimated 190 billion was spent in the design of federal tax breaks for employer-based plans (Hacker 141). There have been several reform attempts on employer-based health insurance in the U.S, but most were unsuccessful, and the ones that were, didn’t provide the true reform needed.
One reason the reform attempts were unsuccessful was due to private interest groups blocking legislation. Especially in the realm of employer-based health insurance, there are many who stand to abet from the system remaining as it is, and are unwilling to encourage powerful of the health care reform that has been proposed. The Insurance industry avidly opposed the major push for health care reform in the 1990’s (Wiener, Estes, Goldenson, and Goldberg). This is an example of private vs. public interest groups and the role they play in policymaking. Private interest groups, like pharmaceutical and insurance companies, tend to have far more resources than public interest groups, such as the AARP which would generally favor health insurance reform. Since an increasing amount of legislators are turning to the bureaucracy, and private interest groups have more sway, policy often favors their interest.
This is a dilemma that reformers of employer-based health insurance have seen throughout their attempts. In the early 1970’s, a goal of President Nixon was to reform the employer based system. He had hoped to pass legislation that would mandate employers to provide health benefits. This reform was not seen, but instead in 1974 the Employee Retirement Income Security Act (ERISA) was passed by Congress (Hacker 147-150). Instead of mandating an employer to offer health benefits, this understanding regulated an employer’s health insurance opinion if they chose to have one. A provision of this allowed for employers to dash regulations imposed by the site by paying for health benefits directly, this was called self insurance. This undermined mammoth risk pooling, which was a practice of pooling a titanic number of people for health insurance plans which facilitated more inclusive, inexpensive coverage (Hacker 146-147). The provision caused many employers to switch to self insurance, and partially led to the decline of the employer-based health insurance system.
The above example of ERISA shows how the goal of a enormous reaching policy can be watered down as it goes through the policy process. The goal of President Nixon may have been to require all employers to provide health benefits, but the only policy that came out of the process simply regulated the employers if they chose to offer health benefits.
One of the largest attempts to completely change the health insurance system in the U.S was in 1993-’94. This attempt came end to bringing the U.S one step closer to universal coverage, but failed; furthermore, it divided Democrats and Republicans on how to solve the pickle. Looking at the reasons why this attempt failed sheds light on why no major reform of health insurance policy in the U.S has taken root since the inception of Medicare and Medicaid over forty years ago. The Health Security Act proposed by President Clinton in 1993 called for mandates on the employer to provide benefits and primarily aged the theory of “managed competition (Hacker 148) and was extremely complicated, making it harder for the American people to easily understand. Conservatives were able to expend the complexity of the thought as an advantage for them. They old-fashioned agenda-setting to represent to the public that this view meant more government intrusion into their lives, and instead presented the alternative of Medical Savings Accounts. This idea, which today has gained a gorgeous amount of abet, allowed for employees to have their bear insurance accounts to manage as they wanted (Hacker 148-150.
This push by conservatives was very effective because it appealed to Americans’ individualism. The American people tend be schizophrenic in what they want out of policy. One aspect of this is referred to as Bourgeois Liberalism, which stresses the role of the individual and negative freedoms (what the government cannot do to its citizens). The other is referred to as Protestant Communitarianism, which stresses the ability of the people united together and obvious freedoms (what people can do collectively to control their maintain destiny). These two conflicting characteristics played a crucial role in the failure of the Health Security Act. The Clinton Administration view their health care conception would be able to transcend the conflicting American nature by challenging to both aspects. In many ways they were true, but were unsuccessful and instead, conservatives were able to capitalize on Americans’ ideological conservatism in gaining opposition to the Health Security Act.
The ability of conservatives to shape the thought of the American public to oppose such a policy lends back to an alternative perspective of how policy and notion budge from the government to the people. This theory says that public receives its agenda from the government and public offers policy attend, or in this case, policy opposition. Conservatives were not alone in shaping public conception, private interest groups that stood to serve from the failure of the Health Security Act, were also crucial (Hacker 149). As mentioned earlier, private interest groups, due to their enormous resources (primarily money) were able to sway politicians and the public to assume their spot on a distinct policy.
The Clinton administration opinion that this bill was so far-reaching that they could even obtain the befriend of these interest groups: insurance companies, hospitals, and employers (Hacker 149). Instead of gaining their abet, they were instrumental in defeating the bill. They were able to exhaust the media as portion of shaping public concept to oppose the policy. The media began running stories that centered on questioning whether or not there was a right health care crisis (The Rise and Drop of the Political Catchphrase). Stories like these and the continuing of conservatives and private interest groups portraying the Health Security Act as more government intrusion, led to its failure.
After this, as previously mentioned, conservatives began pushing for an alternative to the Clinton Administration’s idea called Medical Savings Accounts (now referred to as Heath Savings Accounts) as section of their Personal Responsibility Crusade. At first, these were not current among both employers and employees, but over the past ten years, employers seem to be more accepting of them (Hacker 152). In 2005, the number of employees enrolled in Health Savings Accounts rose from 2.4 million to 4.5 million in 2007 (Hacker 153). Today the health insurance spot is becoming more prominent than ever before. Current plans from President Obama and Congress prove possibility for legislation to reform the unusual system. The new understanding proposed by President Obama would not be a mandate for all employers to provide health benefits; instead, it is a mandate that would require the companies that don’t offer health benefits to pay a tax that would go toward funding health coverage (Pallarito). This is the most unusual step in reforming the employer-based health insurance system. The high numbers of uninsured and underinsured have led the public to be supportive of health care reform. While their opinions on how to reform the system may vary, the direct is viewed as a priority.
While there has been a decline in the viability of an employer-based health insurance system, this does not mean that employer involvement in health care coverage is the pickle. Rather by reforming the employer-based system to where all employees are covered and accounts for the people level-headed left uninsured, the modern health insurance crisis can be reversed. Distinguished policy changes to our health insurance system have not been seen since Medicare and Medicaid in 1965, however by looking at the attempts and where they failed, future plans can have a greater chance for success. In addition, by recognizing the nature of the American people, policies can epic for their sometimes schizophrenic nature and better assume the views of the people.
Glied, Sherry. “The Employer-Based Health Insurance System: Mistake or Cornerstone? .” Policy Challenges in Current Health Care 25 May 2005 37-52.10 Apr 2009. http://www.rwjf.org/files/research/037-Part%201-Chapter%203.pdf>.
Gould, Elise. “The Erosion of Employment-based Insurance: More Working Families Left Uninsured.” Economic Policy Institute 31 Oct. 2007. 10 Apr 2009.
Hacker, Jacob. The Gigantic Risk Shift: The Original Economic Insecurity and the Decline of the American Dream. Original York: Oxford University Press, 2008.
Herrick, Devon. “Why Employer-Based Health Insurance is Unraveling.” National Center for Policy Analysis. 01 Nov. 2005. National Center for Policy Analysis. 14 Apr 2009 http://cdhc.ncpa.org/commentaries/why-employer-based-health-insurance-is-unraveling>.
Pallarito, Karen. “Obama Backs Health Care Reform.” USA TODAY 23 Jan. 2009. http://www.usatoday.com/news/health/2009-01-23-obama-healthcare_N.htm
“The Rise and Tumble of the Political Catchphrase.” Time 14 Feb. 1994. http://www.time.com/time/magazine/article/0,9171,980129,00.html>
Wiener, Joshua, Carol Estes, Susan Goldenson, and Sheryl Goldberg. “What Happened to Long Term Care in the Health Reform Debate of 1993-1994: Lessons for the Future.” Urban Institute 01 June 2001 207-252. 17 Apr. 2009. http://www.urban.org/url.cfm? ID=1000297>.
The employer-based health insurance system in the United States has weakened over the past several years. The amount of coverage provided has dropped dramatically, and more of the burden is being shifted to the individual. The average employee under such a idea has seen their premiums go up and their coverage go down. Today such a system is coming under increasing scrutiny. The decline in the effectiveness of the system has caused policy makers to gape into dramatically reforming health insurance in the United States or adopting an alternative health insurance system.
Employer-based health insurance in the United States primarily got its launch around the time of World War II. A wage freeze was established as share of a larger inflation control policy. This led many companies, in order to attract employees, to offer increased benefits including health insurance (Glied 38). The companies had even more incentive because the non-wage allotment of those benefits were not taxed due to a tax code that does not regard non-wage benefits as compensation; therefore, is not subject to income and payroll taxes. This tax provision was officially recognized by the IRS in 1954 (Glied 38). All of these, essentially, indirect policies led employer-based health insurance to become the most celebrated originate in the United States.
The largest decline in the number of people prescribing to an employer-based system was not seen until the 2000’s. Each year since then, it has been steadily declining. In the year 2000, the percentage of Americans that received their health insurance through an employer was 64.2%. By 2006 that had fallen to 59.7%. This decline is the essential reason for overall increase in the number of Americans that are uninsured in the past ten years, which in 2006 stood at 47 million Americans (Gould). This figure, however, does not even address how many Americans are underinsured.
Mighty of the reason for the overall decline of employer-based health insurance (both in enrollees and in adequacy) has been in the private sector. The example of General Motor’s health insurance thought for their workers illustrates this. When GM decided to provide health insurance benefits and pension plans, they had assumed that their profits would remain staunch, and the trace of those health benefits would not increase, but they did. The cost of health care rose at a rate three times faster than the rate of inflation, contributing to the ample cost increase for GM to provide health insurance to their employees (Herrick).
In addition to changes in the private sector, there were essential policy changes that affected the decline in the viability of the employer-based system. One of these policies that contributed to the decline was estimable tax breaks given to companies that provided health benefits. An estimated 190 billion was spent in the get of federal tax breaks for employer-based plans (Hacker 141). There have been several reform attempts on employer-based health insurance in the U.S, but most were unsuccessful, and the ones that were, didn’t provide the precise reform needed.
One reason the reform attempts were unsuccessful was due to private interest groups blocking legislation. Especially in the realm of employer-based health insurance, there are many who stand to assist from the system remaining as it is, and are unwilling to back considerable of the health care reform that has been proposed. The Insurance industry avidly opposed the major push for health care reform in the 1990’s (Wiener, Estes, Goldenson, and Goldberg). This is an example of private vs. public interest groups and the role they play in policymaking. Private interest groups, like pharmaceutical and insurance companies, tend to have far more resources than public interest groups, such as the AARP which would generally favor health insurance reform. Since an increasing amount of legislators are turning to the bureaucracy, and private interest groups have more sway, policy often favors their interest.
This is a quandary that reformers of employer-based health insurance have seen throughout their attempts. In the early 1970’s, a goal of President Nixon was to reform the employer based system. He had hoped to pass legislation that would mandate employers to provide health benefits. This reform was not seen, but instead in 1974 the Employee Retirement Income Security Act (ERISA) was passed by Congress (Hacker 147-150). Instead of mandating an employer to offer health benefits, this understanding regulated an employer’s health insurance understanding if they chose to have one. A provision of this allowed for employers to hurry regulations imposed by the spot by paying for health benefits directly, this was called self insurance. This undermined sizable risk pooling, which was a practice of pooling a vast number of people for health insurance plans which facilitated more inclusive, inexpensive coverage (Hacker 146-147). The provision caused many employers to switch to self insurance, and partially led to the decline of the employer-based health insurance system.
The above example of ERISA shows how the goal of a titanic reaching policy can be watered down as it goes through the policy process. The goal of President Nixon may have been to require all employers to provide health benefits, but the only policy that came out of the process simply regulated the employers if they chose to offer health benefits.
One of the largest attempts to completely change the health insurance system in the U.S was in 1993-’94. This attempt came finish to bringing the U.S one step closer to universal coverage, but failed; furthermore, it divided Democrats and Republicans on how to solve the predicament. Looking at the reasons why this attempt failed sheds light on why no major reform of health insurance policy in the U.S has taken root since the inception of Medicare and Medicaid over forty years ago. The Health Security Act proposed by President Clinton in 1993 called for mandates on the employer to provide benefits and primarily obsolete the theory of “managed competition (Hacker 148) and was extremely complicated, making it harder for the American people to easily understand. Conservatives were able to exercise the complexity of the opinion as an advantage for them. They mature agenda-setting to relate to the public that this belief meant more government intrusion into their lives, and instead presented the alternative of Medical Savings Accounts. This conception, which today has gained a aesthetic amount of succor, allowed for employees to have their acquire insurance accounts to manage as they wanted (Hacker 148-150.
This push by conservatives was very effective because it appealed to Americans’ individualism. The American people tend be schizophrenic in what they want out of policy. One aspect of this is referred to as Bourgeois Liberalism, which stresses the role of the individual and negative freedoms (what the government cannot do to its citizens). The other is referred to as Protestant Communitarianism, which stresses the ability of the people united together and sure freedoms (what people can do collectively to control their contain destiny). These two conflicting characteristics played a crucial role in the failure of the Health Security Act. The Clinton Administration concept their health care understanding would be able to transcend the conflicting American nature by keen to both aspects. In many ways they were good, but were unsuccessful and instead, conservatives were able to capitalize on Americans’ ideological conservatism in gaining opposition to the Health Security Act.
The ability of conservatives to shape the understanding of the American public to oppose such a policy lends attend to an alternative perspective of how policy and thought budge from the government to the people. This theory says that public receives its agenda from the government and public offers policy relieve, or in this case, policy opposition. Conservatives were not alone in shaping public conception, private interest groups that stood to attend from the failure of the Health Security Act, were also crucial (Hacker 149). As mentioned earlier, private interest groups, due to their gargantuan resources (primarily money) were able to sway politicians and the public to assume their spot on a clear policy.
The Clinton administration notion that this bill was so far-reaching that they could even collect the attend of these interest groups: insurance companies, hospitals, and employers (Hacker 149). Instead of gaining their serve, they were instrumental in defeating the bill. They were able to consume the media as section of shaping public thought to oppose the policy. The media began running stories that centered on questioning whether or not there was a fair health care crisis (The Rise and Topple of the Political Catchphrase). Stories like these and the continuing of conservatives and private interest groups portraying the Health Security Act as more government intrusion, led to its failure.
After this, as previously mentioned, conservatives began pushing for an alternative to the Clinton Administration’s view called Medical Savings Accounts (now referred to as Heath Savings Accounts) as allotment of their Personal Responsibility Crusade. At first, these were not approved among both employers and employees, but over the past ten years, employers seem to be more accepting of them (Hacker 152). In 2005, the number of employees enrolled in Health Savings Accounts rose from 2.4 million to 4.5 million in 2007 (Hacker 153). Today the health insurance scrape is becoming more prominent than ever before. Fresh plans from President Obama and Congress display possibility for legislation to reform the original system. The modern understanding proposed by President Obama would not be a mandate for all employers to provide health benefits; instead, it is a mandate that would require the companies that don’t offer health benefits to pay a tax that would go toward funding health coverage (Pallarito). This is the most unusual step in reforming the employer-based health insurance system. The high numbers of uninsured and underinsured have led the public to be supportive of health care reform. While their opinions on how to reform the system may vary, the remark is viewed as a priority.
While there has been a decline in the viability of an employer-based health insurance system, this does not mean that employer involvement in health care coverage is the predicament. Rather by reforming the employer-based system to where all employees are covered and accounts for the people serene left uninsured, the unusual health insurance crisis can be reversed. Vital policy changes to our health insurance system have not been seen since Medicare and Medicaid in 1965, however by looking at the attempts and where they failed, future plans can have a greater chance for success. In addition, by recognizing the nature of the American people, policies can record for their sometimes schizophrenic nature and better think the views of the people.
Glied, Sherry. “The Employer-Based Health Insurance System: Mistake or Cornerstone? .” Policy Challenges in Unusual Health Care 25 May 2005 37-52.10 Apr 2009. http://www.rwjf.org/files/research/037-Part%201-Chapter%203.pdf>.
Gould, Elise. “The Erosion of Employment-based Insurance: More Working Families Left Uninsured.” Economic Policy Institute 31 Oct. 2007. 10 Apr 2009.
Hacker, Jacob. The Mountainous Risk Shift: The Novel Economic Insecurity and the Decline of the American Dream. Unique York: Oxford University Press, 2008.
Herrick, Devon. “Why Employer-Based Health Insurance is Unraveling.” National Center for Policy Analysis. 01 Nov. 2005. National Center for Policy Analysis. 14 Apr 2009 http://cdhc.ncpa.org/commentaries/why-employer-based-health-insurance-is-unraveling>.
Pallarito, Karen. “Obama Backs Health Care Reform.” USA TODAY 23 Jan. 2009. http://www.usatoday.com/news/health/2009-01-23-obama-healthcare_N.htm
“The Rise and Descend of the Political Catchphrase.” Time 14 Feb. 1994. http://www.time.com/time/magazine/article/0,9171,980129,00.html>
Wiener, Joshua, Carol Estes, Susan Goldenson, and Sheryl Goldberg. “What Happened to Long Term Care in the Health Reform Debate of 1993-1994: Lessons for the Future.” Urban Institute 01 June 2001 207-252. 17 Apr. 2009. http://www.urban.org/url.cfm? ID=1000297>.
