Tuesday, June 12, 2007

Does Your Employer Have to Provide Health Insurance?

By Barry Waxler

Many people ask the question, “does your employer have to provide Health Insurance”? The answer is no, but several potential Presidential candidates are suggesting that they should.

Many people are confused about the issue of employer sponsored health insurance. In the good old days, which were really not that long ago, group health insurance plans that were available from employers were the most common form of health insurance. They were called the good old days for a reason. These group health plans were good for everyone involved. The premiums were low to the consumer; the employers paid only a small amount of the cost of the plan; Insurance Companies were able to make good profits; and everyone was covered for pretty much any medical condition that came along.

What changed all this? The culprit was the ever increasing cost of medical care in the United States. The employer based group plans were forced to increase their premiums to keep up with these increasing costs, and there was only so much of it that could be passed on to the employee. It was the employer’s share of the costs that rose the most dramatically. The Insurance Companies were forced to come up with solutions to a problem they had not caused. The good old days were over.

Yet, many employers continued to offer plans. In fact, so many large scale employers did so that it is generally assumed that they had to do it. What was the reason they kept up trying to provide health insurance for their employees despite rising costs? The answer is that health insurance had become an expected benefit and this benefit was closely associated with the status of the employer. In some cases, Union contracts mandated that health insurance be provided, but in non-Union companies, the failure to offer health insurance was seen as a major indicator that a Company was not a very good place to work. Employers had to compete for the best employees and were forced to offer this benefit even as they cut other fringe benefits to be able to afford it.

Still, smaller employers were just unable to provide it and the number of uninsured Americans has risen steadily until many people consider this a major problem today. Several Democratic candidates have proposed plans that would make it mandatory that all employers either offer health insurance to their employees or else contribute to a national plan that would be modeled after Medicare without the age eligibility requirements. Providing funds for health insurance would become a requirement for doing business in America.

The Insurance Industry has been doing a good job with the introduction of creative plans that have cut the costs of health insurance and exerted pressure on the Medical profession to control their costs as well. It would be most helpful if more individuals would recognize the true nature of the problem. Those who are receiving health insurance benefits from their employers should be thankful, and should make an effort to understand and appreciate just what this is costing their employers. They should understand also the effects of these costs on their other benefits, including their wages and the costs of the goods produced. Health Insurance is in crisis and there is no easy answer. Informed people will be able to make the best decisions both for themselves and the country as well.

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