Is job-based health insurance unaffordable?

by Lesley Politi on November 3, 2008

Is job-based health insurance unaffordable?

October 30th, 2008,

Health insurance is a hot topic this election season, but mandating all employers to provide it for all their workers could drive many small companies out of business, according to results of a new survey.

Six out of 10 Americans have health insurance through their employer. That has dropped 10 points since 1987 as costs have gone up. About 38 million people who have jobs don’t have health coverage because their company doesn’t provide it, they don’t quality for the company plan or they can’t afford individual coverage.

Yet when management consultant Mercer asked more than 500 employers without health insurance how much they’d pay per worker for insurance, the majority wouldn’t even pay $50 a month. Here’s the breakdown:


To put these results in context, Massachusetts requires employers that don’t provide coverage to pay $295 per employee per month to the state, and indications are that this amount doesn’t cover costs and may go up soon.

A mandate would force companies that couldn’t or wouldn’t pay to close.

More than a third of businesses with fewer than 500 employees do not have any employee health insurance. Those surveyed said they cannot afford it. The decline in employment-based coverage seems to support that response.

Here are the most common reasons employers gave for no coverage:





“This finding highlights how tough it’s going to be to ask very small employers to voluntarily take on the expense of providing health coverage,” said Linda Havlin, a Mercer worldwide partner. “It also helps explain why even relatively low-cost catastrophic plans like HSAs have not made great inroads with small employers that find it financially challenging to offer coverage.”

When asked if they support any of the health care reforms that have been proposed by the presidental candidates, members of Congress or state governments. Here’s the reaction (both companies with and without health insurance responded):

  • Cap the tax exclusion for employer-sponsored health benefits: 31% favor, 41% oppose
  • Require employers that don’t have insurance to pay into a government fund to cover the uninsured: 31% favor, 50% oppose
  • Put the mandate for coverage on the individual 53% favor, 30% oppose
  • Federal government is the sole payer for health care services (like Canada):29% favor, 51% oppose
  • Federal government reimburses employers’ health expenses above a certain level (”stop-loss”): 46% favor, 24% oppose
  • Give federal government (not states) control over health insurers: 24% favor, 43% oppose
  • Replace employer plans with individual plans partly financed by employer contributions: 34% favor, 30% oppose.
  • Allow states to mandate employer health coverage: 34% favor, 21% oppose

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