How many people have lost their employer-based health insurance during the current pandemic in each of the following countries?
• United States – 27,000,000
• Australia – 0
• Belgium – 0
• Canada – 0
• Denmark – 0
• Finland – 0
• France – 0
• Germany – 0
• Greece – 0
• Italy – 0
• Japan – 0
• New Zealand – 0
• Norway – 0
• Portugal – 0
• South Korea – 0
• Spain – 0
• Sweden – 0
• United Kingdom – 0
Millions in the United States have lost job-related health insurance while those in other nations have not. For persons who get their health insurance from an employer, losing a job means losing health benefits.
According to a study by the Kaiser Foundation, as of May 2, 2020, nearly 27 million people could lose their employer-sponsored insurance. An estimate from the Robert Wood Johnson Foundation showed that this figure could go up to 43 million if job losses continued. Of course, some of these people will become eligible for coverage under the Affordable Care Act, but that is affected by eligibility and timing issues.
In the other 17 countries on the list, zero people lost their health insurance. Each of these countries treats health care as a right and provides universal/government-sponsored health insurance.
Before the pandemic, more than one-half of all Americans had employer-sponsored insurance. The loss of jobs and, therefore, health insurance that is happening to millions of Americans is a result that many have predicted could come—one way or another.
How did we get here? It is worth asking that question because employer-based health insurance has been an impediment to universal coverage in the United States.
The employer-based health insurance industry that exists today is mostly the unintended result of a temporary tax break from the early 1940s. This tax break became the basis for U.S. healthcare.
Before World War II, most Americans paid for their medical care, first out-of-pocket, and then in the 1930s through Blue Cross health insurance that provided guaranteed service for a fixed fee.
During WW II, businesses and industries needed workers and were willing to pay higher wages. However, they were blocked from during so by the Stabilization Act of 1942. The Roosevelt administration feared high inflation like that which devastated post-WW I Germany. As a concession to labor groups, the federal government temporarily exempted employer-based health benefits from income tax and wage controls.
There were at least two reasons companies readily paid these additional benefits. One was that they were employee costs that would have to be paid, either through larger salaries, which were prohibited, or these health benefits, which were attractive to employees.
The second incentive for employers to provide health benefits to workers was tax exclusion. In 1954, the IRS ruled employer payments to their workers’ health insurance were not taxable income. Employers received a 100 percent tax deduction while the benefits employees received were exempt from federal, state, and city taxation.
Ezekiel Emanuel, one of the architects of the Affordable Care Act (ACA), said, “The tax exclusion is the single largest tax break in the entire U.S. tax code, worth about $250 billion in 2013.”
As the cost of employer-provided health insurance increases, some scholars have predicted that many companies will stop providing health insurance and provide salary increases (smaller than the burden of health insurance premiums). In 2014 Emanuel predicted that by 2025 fewer than 20 percent of Americans will get their coverage that way. Thus, it appears that there were cracks in the employer-provided health insurance before the pandemic.
The pandemic has made it imperative that people re-evaluate the current employer-based health insurance system in favor of something the rest of the industrialized world has—universal health care.
