LIKE MOST HEALTH policy researchers, Bob Moffit and Susan Sered have long been obsessed by the vexing question: Why is America the only industrialized country to link health insurance so closely to employment?
Moffit, who directs the Center for Health Policy Studies at the conservative Heritage Foundation in Washington, says ''it's nuts" that nine out of 10 Americans with private health insurance get coverage through their employers. ''Imagine if auto insurance worked the same way," says Moffit. ''So, if you lost your job, you could no longer drive. That would be profoundly absurd."
Sered, a researcher at the Center for Women's Health and Human Rights at Suffolk University, stands at the other end of the political spectrum from Moffit, yet on this particular point she sees eye-to-eye with him. ''Employer-sponsored care is the main reason for the crisis of the uninsured," she said in an interview.
In ''Uninsured in America: Life and Death in the Land of Opportunity" (University of California Press), Sered and coauthor Rushika Fernandopulle, a primary-care physician and clinical instructor at Harvard Medical School, argue that precisely because healthcare and employment in America are linked, job loss can often have dire consequences-namely, what they call the ''death spiral." Without reliable medical care, unemployed individuals, who often have too many assets to qualify for Medicaid, become more prone to developing serious illnesses and hence less employable. Eventually, many are forced to leave the workforce permanently, and some become a statistic-18,000 Americans, according to a report by the Institute of Medicine, die every year because of the lack of health insurance.
Although Moffit and Sered propose very different solutions to the problem of America's 46 million uninsured-Moffit would put the onus on individuals to buy their own insurance, Sered would have the government take responsibility-they agree that employer-based health insurance is an idea whose time has come and gone.
This fall, with healthcare at the top of the legislative agenda here in Massachusetts, the Bay State's top political leaders are also thinking about the future of employer-sponsored care. Governor Mitt Romney, who has consulted with Moffit and like-minded conservatives, argues that the way to cover the Commonwealth's estimated 500,000 uninsured is to facilitate more affordable basic health insurance and then require individuals to buy coverage for themselves-what's called an ''individual mandate"-with subsidies for low-income residents.
House Speaker Salvatore DiMasi has pledged to put a healthcare bill on Romney's desk before the Legislature adjourns in mid-November. But whatever compromise is hashed out between the governor and Democrats on Beacon Hill, the question raised by Moffit and Sered will remain: Is there an alternative to a system in which the vast majority of Americans-60 percent according to a survey this year by the Kaiser Family Foundation-depend on their employers for health insurance?
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That America's employers ever got into the healthcare business at all is an accident of history. Until the early 1940s, notes Florida State University sociologist Jill Quadagno in her new book, ''One Nation Uninsured: Why the US Has No National Health Insurance" (Oxford University Press), few companies offered health benefits. What set the present system in motion was the sudden influx of some 15 million Americans into the armed forces during World War II.
To avert the runaway inflation likely to result from the tightened labor market, President Franklin Roosevelt pushed through wage- and price-control legislation. Though firms could no longer use higher salaries to compete for workers, there was nothing to stop them from offering fringe benefits, including health insurance. In addition, the Revenue Act of 1942 imposed high taxes on corporate earnings but allowed health benefits to be written off as a tax-deductible business expense, giving corporations an incentive to use health insurance as a bargaining chip in their negotiations with unions.
While employers first started experimenting with health coverage during the war, the next decade saw a huge expansion of corporate health benefits. Between 1946 and 1957, the number of US workers receiving health coverage through an employer jumped by a factor of 12. By 1957, firms were covering 12 million workers plus 20 million dependents. The employer-based system was well suited to the America of Dwight D. Eisenhower, a time when healthcare was relatively inexpensive-amounting to less than 5 percent of Gross Domestic Product, as opposed to nearly 15 percent today-and when many Americans spent their entire working lives toiling for one company.
Today, conservatives argue that it is time to fashion a health insurance system more in synch with the post-industrial US economy-in which job change is frequent and small businesses play an ever greater role. ''Workers no longer live in company housing, nor do they go to the company store," says former House Speaker Newt Gingrich, who now heads the Center for Health Transformation, a K Street consulting firm. ''They should be buying their own healthcare." As Gingrich sees it, large companies might still provide health benefits, but they should move toward a ''defined contribution model," giving workers a lump sum to go out and buy a health plan in the individual insurance market.
For Gingrich and other conservatives-such as Romney, whose proposal would make it easier for workers in small companies to get coverage on their own-the move away from employer-sponsored care is a step toward what President Bush has called ''the ownership society." Two years ago, the Bush administration introduced Health Savings Accounts (HSAs), which combine low-cost catastrophic coverage with a tax-free savings account to pay for medical expenses. Because these policies have a high deductible, they require consumers to monitor their healthcare spending more carefully. While only about a million Americans now have HSAs, Gingrich predicts that within 10 to 15 years, HSAs will become as common as IRAs.
For Paul Pilzer, an economist based in Salt Lake City who advised both President Reagan and the first President Bush, and author of ''The New Health Insurance Solution: How to Get Cheaper, Better Coverage Without a Traditional Employer Plan" (John Wiley & Sons), reducing the ranks of the uninsured requires putting a lid on healthcare spending-now nearly $2 trillion a year. ''Let consumers spend their own money, and we will eliminate a lot of waste," notes Pilzer, who argues that patients often opt for unnecessary drugs or medical tests simply because their health plans foot the bulk of the bill.
But to move away from employer-sponsored care, liberals like Sered and Fernandopulle would not turn to market forces. ''Healthcare is not a market good," Fernandopulle said in an interview. ''It's more like secondary education."
While Fernandopulle thinks the government should play a central role, he doesn't necessarily conclude that a single-payer system-where all Americans would be covered by a plan similar to Medicare-is the only or the best way to go. He favors something akin to the British system, where the public sector offers a basic plan to everyone, but where there is also private insurance. ''Those who want the healthcare equivalent of a prep school education should be able to go outside of the system," he says.
For liberals, government has to step in because solving the problem of the uninsured involves redistributing wealth from the haves to the have-nots. ''To effect any real change, we must address the underlying economic inequality," says James Morone, a professor at Brown University who coedited-with Lawrence Jacobs of the University of Minnesota-a recent volume of academic papers on healthcare policy, ''Healthy, Wealthy and Fair: Health Care and the Good Society" (Oxford).
Len Nichols, a health policy analyst at the New America Foundation, a nonprofit think tank in Washington that stresses bipartisan solutions, has carved out a position right down the middle. He has concluded that employer-sponsored coverage actually makes sense for a small fraction of workers-mostly those at big companies-and doesn't see why we shouldn't keep it in place for them. For low-wage workers and workers in small firms, he advocates subsidies so that they can buy into group plans-such as state-employee plans. Likewise, though he supports individual mandates, he also thinks raising at least a hundred billion dollars in taxes may be necessary to provide insurance to all Americans.
This month, Nichols plans to keep his eyes on Beacon Hill. ''Massachusetts," he says, ''is a fascinating test case, which will help us see where the country is headed."
A Boston-based freelance journalist, Joshua Kendall writes on healthcare for Business Week Small Biz.