Wednesday, July 06, 2011

Employer Coverage Slipping

Health reform shifts the burden of health insurance from employers to individuals and a tapped out Uncle Sam.  The Congressional Budget Office predicts in 2019 employers will insure 14 million fewer Americans than they did in 2008.  The drop is significant as America's population will have grown by 38 million people.

SEIU President Andy Stern said in 2006 that employer health insurance was "dead and not coming back."  Stern served on President Obama's health reform workgroup, supposedly representing the interest of workers..

Texas has the dishonor of having the highest number and percentage of uninsureds in the U.S.  Things are getting worse on the employer coverage front.  San Antonio Express reported:

As employers and workers struggle to absorb the skyrocketing cost of health insurance, fewer Texans below age 65 are opting for coverage through their jobs.
In 2008-2009, 51.5 percent of the state's nonelderly population enrolled in a plan through an employer, down from 62 percent in 1999-2000, according to a June study from the Robert Wood Johnson Foundation and the State Health Access Data Assistance Center.

Nationally, the share decreased by 8 percentage points to 61.4 percent in 2008-2009.
The rest of the country dropped to Texas 2000 levels, while the Lone Star state continued growing legions of uninsureds.  This study speaks to the first leg down, the drop from the blue bar to the brick colored bar in the chart above.  That represents 15 million losing employer health insurance.

The second leg down, the move from the brick bar to the green bar, kicked off with the financial crisis and will choke millions of Americans before health reform "rides to the rescue" in 2014.  That's a drop of 35 million people from employer coverage.  Illustrating this point, the City of San Angelo sent nearly 200 people off their health insurance rolls with draconian premium increases for dependents in January 2011. 

Peter Orszag's "political economy of delayed implementation" is a four year window of suffering for over 50 to 80 million Americans.  One could interpret the bill as setting the stage for for-profit health care companies and private equity underwriters (PEU's) to make grand returns in a bifurcated health care system, where safety net hospitals are called "private tax exempt facilities."  

It's hard to see how health care costs will go down as companies are bought for five times their original investment, in the case of Nancy-Ann DeParle's CareMore, or nearly four times total assets, in the case of TPG Capital's purchase of Immucor.  PPACA clearly set the stage for employers to slowly shed that pesky health insurance benefit.   Who will pick up their slack, suffering individuals, an empty pocketed Uncle Sam or the few remaining "private tax exempt facilities"?

(Click on the graph to view it larger.  This is updated from a March 2010 graph)

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