The Healthcare Economist and Managed Care Matters have been writing about the various merits of a health insurance system that is primarily based on employer-sponsored group health insurance. Joe and Jason have taken different positions, with Joe in favor of employer-sponsored coverage, and Jason taking more of a middle ground approach, noting that while there are some advantages to having health insurance through an employer, it might not be the best scenario.
But why are employers involved in health insurance at all? Is it just tradition? Are we still working with the same mold that was created half a century ago, when employees tended to work at the same place for 40 years and were then rewarded with a pension for the rest of their days? If we really stop and think about it, why are health insurance and retirement funds linked to employers? In the 21st century, employees change jobs and even careers multiple times over their working years. Some people do still stay with the same employer for a lifetime, but it’s not the norm anymore.
When you retirement plan is linked to your employer – as is the case for all the 401k plans out there – and you leave your job, you can just roll your plan over to the one your new employer offers, or you can convert it to an IRA on your own. But if you have employer-sponsored health insurance and you leave your job, the options are not so simple. Yes, you can take COBRA (if you can afford it), but that’s only good for 18 months. After that, you either have to have health insurance in place through a new employer, or get individual coverage on your own. But if you have pre-existing medical conditions, your options are limited. You may not qualify for individual health insurance at all. If you live in a state with high-risk pool health insurance – here we have Cover Colorado – you’ll be able to get health insurance, but it may be very expensive and have a lot more out-of-pocket than you’re used to. If your state has no risk pool, you might just be out of luck unless you get another job that offers health insurance.
Wouldn’t it be simpler for everyone if “individual” insurance were really a group made up of everyone in a state, or even the whole country? What if every Colorado resident could be covered by a range of health insurance plans similar to what is available today in the group and individual market, but without any employer affiliations required? People would be covered continuously, regardless of their employment situation, and would not be trapped in a job just for the health insurance benefits.
To me, employer-sponsored health insurance was a better idea a generation ago than it is today. People are much more mobile today, and need a health insurance plan that is truly portable and not linked to where they live or what job they do.