Eliminating Employer-Sponsored Health Coverage

In the wake of the killing of UnitedHealthcare CEO earlier this month, many in the health care industry have stepped forward to comment on the state of the industry. While the suspect’s motivations have yet to be clearly established, many believe the killing was targeted and a result of anger at the health care industry as a whole. The CEO of Oscar Health recently gave an interview with CNBC where he stated that eliminating the provision of employer-sponsored health insurance coverage would serve as a solution to frustrations with the industry.

We asked two professors and authors of ALM’s Tax Facts with opposing political viewpoints to share their opinions about the Oscar Health CEO’s statements on eliminating employer-sponsored health coverage altogether.

Below is a summary of the debate that ensued between the two professors.

Their Votes:





Their Reasons:

Byrnes: Many of the rationales for encouraging employers to provide health insurance coverage are misguided. Many argue that large companies are on the best footing to negotiate lower rates with powerful health insurance companies, whereas the individual plan participant would have zero leverage. The ability of employers to negotiate better rates for large groups of employees is much less effective than many people might think, meaning that costs remain high on both the employer and the participant side—exacerbating frustration at the individual level.

Bloink: The Oscar Health CEO’s statements don’t really consider the larger picture. Employer sponsored health coverage is one of the most important sources of health insurance coverage in this country. Without the employer mandate and the provision of employer-sponsored coverage, millions of Americans would be without health coverage.

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Byrnes: In reality, the largest employers buy large networks with a view toward the average of their employees. Employees of the largest employers use a wide range of providers. The employer doesn't really have leverage to negotiate better rates because of the size of their networks. So individuals aren’t seeing cost savings and they’re similarly forced into a health coverage situation that’s not tailored toward their individual needs.

Bloink: To think individuals who lose employer-provided health insurance coverage would simply look to the individual marketplace to purchase coverage is naive. In reality, most would forgo coverage entirely. That would lead to a system where those with health coverage would face incredibly increased costs--because they, of course, would be subsidizing those Americans who go without coverage when they inevitably end up requiring health care with no insurance coverage to pay for their care.

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Byrnes: Smaller and mid-sized employers have no negotiating leverage with large insurance networks whatsoever. All except for the smallest businesses are forced to provide health insurance coverage due to the employer mandate—regardless of the cost and effectiveness of that coverage. Employees would be better served using the individual markets and working directly with health insurance providers, where they can locate the health coverage that works best for them. That sense of control—both over the level of coverage they purchase and the cost of that coverage—would go a long way toward reducing frustration with the health care industry.

Bloink: Eliminating employer provided health coverage altogether would only result in a situation where Americans are not receiving the valuable and comprehensive health insurance coverage that they both need and deserve. Of course, the system isn’t perfect. That doesn’t mean we completely overturn our current system. Instead, we should be searching for ways to give employers the opportunity to spend smarter when it comes to the employment benefit health insurance choices.