Academic journal article The Hastings Center Report

The Improbable Future of Employment-Based Insurance

Academic journal article The Hastings Center Report

The Improbable Future of Employment-Based Insurance

Article excerpt

Virtually all ethicists have condemned America's private, voluntary purchase approach to health insurance as a national disgrace. For at least two decades, they have deplored the absence of health insurance, now reported to affect over 44 million Americans--or over 70 million Americans if one includes those who go without insurance for at least part of a year--and noted that it overwhelmingly affects society's poorly off, whose group health status is consistently lower than persons from the middle and upper income groups.[1] They argue that health care is as fundamental and important a public good--and, therefore, one to which all citizens ought to have a rightful claim--as primary education, welfare, the judiciary, police protection, clean air and water, and civil and national defense.[2] And they elaborate on the susceptibility of all people to serious disease and illness, the toll that such illness takes on economic productivity and human happiness, and how ill health prevents people from enjoying the opportunity for personal growth that a liberal democracy holds out.[3]

Despite the breadth, gravity, and familiarity of these claims, moral suasion has conspicuously failed: America's body politic has not been persuaded to embrace a European-like solidarity around universal access to health care. At least one reason for that failure is that the primary source of health care reimbursement for nonelderly Americans, namely employment-based insurance, has evolved a powerful solidarity of its own. From 1987 to 1996, the percentage of American workers whose employers offered health insurance rose slightly, from 72.4 percent to 75.4 percent.[4] In September 1998 the U.S. Bureau of the Census estimated that over 160 million Americans received employment-sponsored insurance, whereas only 8.7 million persons bought health insurance individually.[5] The prevailing view, at least in the corporate sector, is that employers on average pay 66 to 80 percent of their employees' premiums.[6] (This view is stoutly opposed by economists, however, who hold that employees pay virtually the entire cost of the premium, mostly in forgone wages.[7]) And polls indicate that the majority of Americans believe health insurance is the most valuable benefit their employer provides and that employers, not government, should be the primary providers of health insurance.[8]

Ethicists have focused on the numerous ways in which employment-based insurance compromises access to decent care and sought change through moral persuasion. I want to argue that there is another moral problem at issue, that is, that the burdens of employment-based insurance are distributed unfairly. At the same time, the growing trend of healthy employees declining coverage--and thus exiting the employer's risk pool--threatens the entire system. Recalling President Clinton's campaign credo of 1992, "It's the economy, stupid!" I will argue that only those trends portending serious economic harm rather than those assaulting our sense of fairness will prevail as reform issues. In explaining why, I hope to shed some light on the failure of moral rhetoric to persuade Americans to adopt a system of universal access.

Fairness Anomalies

Although Americans give considerable lip service to the notion of health care as a right, they harbor deep-seated reservations about developing a funding mechanism that would enable universal access to care. Ideologically reluctant to adopt the solidaristic approach of most industrially advanced countries that makes health insurance compulsory and funds it through payroll taxes and general revenues, American legislators have opted instead to attract the private sector toward the voluntary purchase of health insurance through a variety of economic incentives.

Most notably, employers and employees over the last fifty years have been offered considerable tax breaks that encourage their participation in health insurance plans. …

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