Why Employer-Sponsored Health Insurance Falls Short

Major tech companies like Google, Amazon, Facebook, and Microsoft are laying off employees en masse, with nearly 190,000 tech workers laid off since the beginning of COVID-19 (Layoffs.fyi). These layoffs aren’t exclusive to tech, with high-profile mass terminations hitting media companies, including Vice, BuzzFeed, and Vox (Forbes). Firms are cutting their workforces amid fears of an impending recession. Loss of employment can be destabilizing, especially since being laid off often means losing health insurance. 

In 2021, $4.3 trillion was spent on healthcare in the U.S., about $12,914 per person (Centers for Medicare & Medicaid Services), with out-of-pocket spending increasing 10.4% to $433.2 billion. This increase is not the result of a higher quality of care or access to services but higher medical and drug prices, forcing millions to choose medical debt or delay medical treatment due to the exorbitant cost of care (PGPF). 

TAKE ACTION

• If you are uninsured or underinsured, use this tool by the National Association of Free & Charitable Clinics to find local services providing free to low-cost healthcare. You can also use it to find and support local clinics.

• Donate to organizations like Vision to Learn, which provides free eye exams and eyeglasses to children in underserved communities.

• Support mobile health clinics and programs like Plan A and the People’s Community Mobile Health Clinic, which offer free healthcare services. 

While the Affordable Care Act (ACA) extended coverage to millions, the U.S. doesn’t have universal coverage, despite this being the standard in many other wealthy countries. According to the U.S. Census Bureau, 28 million people in the U.S. had no health insurance coverage in 2020 (Census). The high cost of insurance is often why folks are uninsured. And while Medicaid and the ACA are meant to make health insurance more accessible, many are either ineligible, like undocumented immigrants, or fall into the coverage gap—”too poor to qualify for ACA marketplace assistance because they have incomes below the poverty line, yet ineligible for Medicaid because their state hasn’t enacted ACA Medicaid expansion” (Center on Budget and Policy Priorities). The 1.9 million people falling into this coverage gap are disproportionately people of color (KFF). If the remaining 10 states, including Texas, Florida, Alabama, and Mississippi, adopted the ACA’s Medicaid expansion, approximately 3.5 million uninsured people would be eligible for Medicaid. 

This is where workplace insurance steps in. 

Many people in the U.S. have health benefits through their workplace, or employer-sponsored health insurance. Even with the pandemic emergency policy that expanded Medicaid coverage, resulting in a 33.7% increase in enrollment since 2020 (Medicaid), private, employer-sponsored coverage covers more than half of the population (KFF). Health insurance is a “recruitment and retention tool” for companies that leverage a deeply fractured healthcare system where the uninsured are priced out and withheld care (American Progress). 

Though the ACA mandates that employer-sponsored health insurance be “affordable” and provide “minimum value” coverage (IRS), 29% of employees who get insurance through their jobs are underinsured—stuck with inadequate coverage that doesn’t meet their healthcare needs, resulting in a financial burden (Commonwealth Fund). A 2019 survey by KFF and Los Angeles Times found that 33% of those with employer-sponsored coverage delayed medical care because of cost; 18% didn’t fill prescriptions, rationed, or skipped doses; and 27% had difficulty paying medical bills (American Progress). And from 2014 until now, a flaw in the ACA created a “family glitch” in employer-sponsored health plans that priced out many families (HealthInsurance.org).

When the ACA expanded health insurance access, employers pushed the costs onto their employees by providing only high-deductible insurance plans “without securing lower prices for care” (NBC News, American Progress). And since “most employers do not adjust premiums or cost sharing based on employee wages or income, those who can least afford it often end up paying a higher portion of their wages toward coverage” (American Progress).

People who rely on employer-sponsored coverage to access medical care depend on jobs that are not guaranteed. This can keep those who are reliant on coverage from organizing or advocating for themselves for fear of being fired. And stranded without coverage in the event they lose their jobs. About 14.6 million newly unemployed workers and their dependents lost coverage by June 2020 due to pandemic terminations (EBRI). And we’re seeing this again with recent mass layoffs and strikes.  

Former baseball player Andrew Toles last played for the Los Angeles Dodgers in 2018. The team renews his contract each year to give him access to health insurance and mental health services after learning he became unhoused and was unable to access treatment for bipolar disorder and schizophrenia without health insurance (LA Times). Were it not for the Dodgers taking extraordinary action, Toles would be unable to receive treatment like counseling and medication. This highlights a major flaw in our current dependency on an insurance-based system. When healthcare is treated as an incentive, not a right, people will always fall through the cracks. 

KEY TAKEAWAYS

• Most U.S. health insurance is employer-sponsored coverage. 

• Health insurance shouldn’t be tied to employment, and healthcare shouldn’t be tied to insurance.

• Medical care is a public necessity that must be universal and not contingent on employment or financial status.