Weekend Reading: The Link Between Employment and Health Care

Posted on July 31, 2009

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Today’s Marketplace Scratch Pad blog points readers to an opinion piece in the Financial Times which I’m guessing will elicit some strong responses from at least some of the people who read this blog. Entitled “America’s healthcare should no longer be tied to jobs,” management consultant and author Matt Miller argues forcefully for the idea of decoupling health insurance from employment.

To say that Miller is not a fan of an employer-based system would be an understatement; at the end of his piece he looks forward to a time when the U.S. consigns “employer-based coverage to the dustbin of history, where it now belongs.”

The heart of his argument is this:

America’s unique employer-based healthcare system may have made sense 50 years ago, when healthcare was cheap and business faced little global competition. But today’s circumstances are radically different. Soaring health costs strangle business and absorb cash that could otherwise go to wages. The link between healthcare and employment explains why millions of Americans have lost coverage during this recession. Budding entrepreneurs with ill spouses or children stay in jobs they loathe for fear of losing the insurance they need. Keeping employers at the core of the welfare state is bad for business, bad for the economy and bad for families.

Harsh words.

It’s clear that the current employer-based system isn’t going to be dismantled any time soon; it is far too established and covers far too many people for it to disappear overnight. But having said that, the employee benefits community would be well-advised to explain more forcefully what the advantages are to maintaining an employer-based system.