Econ-Atrocity: Health Care on a Wing and a Prayer

Health Care on a Wing and a Prayer
By Jonathan Teller-Elsberg, CPE Staff Economist

Millions of employed Americans who are offered health insurance through their jobs are turning down the benefit because of high costs. This has been a tragic fact for many years, but the situation is only getting worse.

According to a recent report from the Robert Wood Johnson Foundation, the number of workers who declined to accept health insurance when it was offered by their employer increased by three million between 1998 and 2003. All told, some 12 million workers eligible for work-based health insurance turned it down in 2003.

Over the years of the study, the average annual cost to the worker to accept employer-supplied insurance went up by over $1,000, a 42% jump. It hardly needs mentioning that average wages have not kept pace.

Rising costs are not necessarily the reason that all of those 12 million workers declined the offered coverage—some workers turn down the health insurance from their own job because they are better off being covered as part of a family member’s work-based insurance.

Still, cost is the reason that most uninsured people lack coverage. Insurance costs have been rising for workers and employers alike. In both 1998 and 2003, employers who offered health insurance to their workers covered an average of 82% of the premiums. This means that employers also faced a 42% increase in their costs of providing health benefits. A predictable result is that more and more employers decide not to offer health insurance even as an option.

Altogether, 34% of full-time workers in private industry were not covered by employer-provided health insurance in 2004. Even those lucky enough to have insurance as an option, and lucky enough to be able to afford their share of the premium, have faced rising healthcare costs that take a toll. Rising deductibles, capped coverage, and other aspects of miserly insurance plans leave working people facing terrible financial risks. In 2001, half of Americans filing for personal bankruptcy cited medical expenses as helping to push them over the line. Of those, three quarters had health insurance when their illness or injury struck.

Clearly, the health care system in America is out of whack. When millions of workers can’t afford coverage, and many who have coverage are still driven to bankruptcy because their insurance is so stingy, we need real alternatives.

The simplest solution is a national health plan that provides universal coverage. From Canada to New Zealand, all the other economically advanced countries of the world offer examples of health care systems that care for peoples’ health instead of insurance and pharmaceutical corporation profits.

Until citizen pressure drags such a solution out of a resistant government, people can band together to create insurance alternatives. A leader in this type of grassroots movement is the Ithaca Health Alliance health care co-op, which provides a wide range of services for only $100 per year.

Sources and resources:

• Washington Post, “FINDINGS: More Are Opting Out of Employers' Insurance,” 5/5/06, p. A9, http://www.washingtonpost.com/wp-dyn/content/article/2006/05/04/AR2006050401708.html.
• Robert Wood Johnson Foundation, “Report Shows Decline in Employees Accepting Health Insurance, Rising Insurance Premiums Across Nation,” 5/4/06, http://www.rwjf.org/newsroom/newsreleasesdetail.jsp?id=10408.
• Jonathan Teller-Elsberg, Nancy Folbre, and James Heintz, Field Guide to the U.S. Economy (Revised and Expanded), pp. 27 and 122, New York: The New Press, 2006. http://www.fguide.org/.
• Ithaca Health Alliance, http://www.ithacahealth.org.
• Physicians for a National Health Plan, http://www.pnhp.org.

© 2006 Center for Popular Economics

Econ-Atrocities are a periodic publication of the Center for Popular Economics. They are the work of their authors and reflect their author's opinions and analyses. CPE does not necessarily endorse any particular idea expressed in these articles.