Having health insurance carried by employers has a long history in this country, but it may be coming to an end thanks to the Affordable Care Act (ACA).
Employer-sponsored health insurance plans have been around since the early 20th century, though they became more of a staple in employer-employee relations around World War II.
At the time, the labor market was tight due to the need for goods and services during the war, and federally imposed wage and price controls prohibited employers from raising wages enough to attract workers. When the War Labor Board declared that fringe benefits like health insurance didn't count as wages for the purpose of wage controls, it led to a significant increase of offers of fringe benefits, especially health care coverage, to attract workers.
Employers have been desperately trying to get the burden of health insurance costs off their books for a while now. Most employers simply can't afford it. The question becomes whether policies offered under the ACA can be made affordable and attractive enough to take the place of traditional employer backed insurance.
The other day, I was corresponding with a reader about the ACA and its effect on various stakeholders. He said, "Personally, I see Obamacare as a way station--a step in beginning to decouple insurance from employment, which most people, especially employers, see as a good thing."
Right now the idea is just a dream. As things stand, not only will the ACA not take the burden off employers backs, it will eventually force employers to insure their workforce or pay hefty fees.
This year the premium numbers are pretty high for an "affordable" plan. Insurance industry executives and their actuaries making a lot of guesses as to just how bad things could get.
"Actuaries predicted everything that could go wrong will go wrong," said JB Silvers, Professor of Health Finance at the Weatherhead School of Management at Case Western University. "It will take them a couple of years to price things based on what's actually happening."
If the ACA plans do well in year one, however, it will give carriers the incentive to lower their prices for competitive reasons, Silvers says. And eventually, prices may fall low enough that it's more cost-effective for individuals to buy ACA plans then pay out whatever their employer charges.
Ultimately, if the exchanges work as hoped and competition pushes prices down, people will have every reason to buy their own insurance, rather than taking whatever the employer offers.