EMPLOYER-SPONSORED COVERAGE: What Ails the System?

      Writing in this week's New England Journal of Medicine, American Prospect co-editor Robert Kuttner takes a look employer-sponsored health coverage. The second in a series of eight NEJM articles examining the nation's health care system, Kuttner concludes that what ails the system is likely to continue as long as employer-sponsored plans are the main mode of coverage. Although more employers are offering health insurance, the actual "proportion of workers who actually got the insurance" has fallen. This is because many workers cannot afford the "economically onerous" coverage and a larger percentage of workers are "part-time or temporary employees who do not qualify for insurance benefits." As new technology and an aging population have contributed to escalating medical costs, managed care attempted to mend the situation with cost containment efforts. Kuttner writes, however, that this was accomplished more by employers "shifting costs to employees" than the medical community finding "more efficient uses of health care dollars." As a result, employees are increasingly being hit with rising shares of "premiums, deductibles, copayments and other out-of-pocket costs." This has the effect of squeezing many workers out of coverage options, especially low-income workers who feel the added costs more acutely. As a result, the ranks of the uninsured continue to grow. "Although employers are no longer reliable sources of health coverage for employees and their families, few consumers have other attractive alternatives," writes Kuttner, concluding, "The current pattern -- shifting costs to employees, paring benefits, and resulting increases in the number of the uninsured and underinsured -- is likely to persist as long as the basic system of employer- provided health insurance continues" (1/21 issue).