Will jobs without healthcare become a U.S reality?

2007

For a large proportion of Americans, the idea of their employer paying for health care is sacrosanct, a benefit of right even if it isn't one to which they are legally entitled. But ever-rising costs could mean that even large employers will reach a "tipping point" where offering such benefits is no longer financially viable.

A study by insurance company Buck Consultants has predicted double digit increases in the cost of healthcare coverage for American employers next year.

At the same time, the independent Employee Benefit Research Institute (EBRI) has warned rising costs means the system for funding healthcare needs urgent reform.

The Buck survey has predicted that costs for the most popular plans will continue to increase next year, rising by on average more than 10 per cent.

The good news, according to the EBRI, is that employers are not on the verge of dropping benefits – yet.

Part of the reason for this is that dropping benefits would be a seismic shift that most employers recognise Americans would simply not accept.

The vast majority of American workers and their families who have health insurance currently obtain it through their jobs, pointed out the EBRI.

Yet the employment-based health system in the U.S remains voluntary, and rapidly rising health costs are leading some employers to take a long, hard look at the issue, it warned.

"An evaluation of recent data does not suggest that the end of employment-based health benefits is upon us," said Paul Fronstin, director of the EBRI health research and education programme.

"However, the message from some associations representing employers is that the existing employment-based system must be reformed because the status quo is unsustainable.

"Some individual employers, including leaders in the field, appear to share this new vision," he added.

Fronstin said there had been much debate in recent months about whether employers were reaching a "tipping point" where they would start to end employment-based health benefits.

There had been various reports arguing that employment-based health coverage was disappearing or even "melting away like a popsicle on a summer sidewalk", he pointed out.

Yet these dire warnings were not yet supported by the evidence, although it could be a case of employers waiting for the first one to blink, he added.

"Many individual employers believe there is a business case for offering health benefits to their workers and they continue to invest substantial amounts of money in their health programmes," he said.

"They also tend to agree that if one major employer were to drop health benefits, others would follow," he added.

The percentage of workers reporting that they had access to health benefits through their job was largely unchanged from the mid-1990s and down only slightly from the late 1980s, he pointed out.

In 2005, nearly three quarters of workers who were not self-employed reported they were eligible for health benefits through their own job, up slightly from 73.6 per cent reported in 1995.

Nevertheless, take-up rates for employment-based health benefits were falling.

Some 83.5 per cent of workers took up such benefits in 2005, against nearly 88 percent in 1988, the research suggested.

Yet fewer than 5 per cent of workers eligible for health benefits were uninsured, it added.

Since 2000, the percentage of workers with health benefits had fallen to about 71 per cent and the percentage of small employers offering health benefits in 2007 was about the same as it was in 1996.

Rising costs did mean workers were paying more for health benefits, the research calculated.

Premiums for employee-only coverage had increased by 86 per cent. However, workers' out-of-pocket costs as a share of total spending had fallen.

Other factors that might cause large employers to change course included the elimination of the employer tax deduction for health benefits, a movement to universal coverage, or the erosion of the federal pre-emption of state regulation of health benefits, argued Fronstin.

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