by James A. Bacon
The percentage of Virginians with employer-provided health care has reached the lowest point in almost 20 years. While a higher percentage of Virginians receive health care coverage in the Old Dominion than workers do nationally, that percentage is declining. And the percentage of premiums paid by employees is going up. So finds the Commonwealth Institute in its latest research report, “Unaffordable, Unavailable, Uncovered.”
The problem is particularly acute among businesses with fewer than 50 employees. Only 40% of businesses with fewer than 50 employees offered health insurance in Virginia in 2010 — compared t0 97% of businesses with more than 50 employees who did.
The Commonwealth Institute documents a real problem. The medical insurance system in the United States is broken.
The authors, John McInerney and Michael Cassidy, suggest that the Affordable Care Act will help. The ACA provides tax credits for businesses with fewer than 25 employees and average wages less than $50,000 up to 235% of the premiums paid. The authors don’t see many new businesses signing up to take the credit, but they hope that it might prevent some businesses from dropping coverage. Another reform is the creation of a purchasing pool that will allow small businesses to access and purchase health insurance coverage for their workers, the Small Business Health Option Program.
We’ll see how those insurance reforms work out. In the meantime, as documented previously in this blog, Obamacare has made life more difficult for small-company insurers by requiring all insurance plans to pay at least 80% of their premiums in benefits, driving at least one start-up insurer out of business and making the space less attractive to others. (See “How Obamacare Helps the Working Class (Not)“). Furthermore, the federal government will impose minimum coverage standards, eliminating the option of providing bare-bones plans for those who can’t afford the gold-plated plans.
So, color me skeptical. The way to fix the broken market for health insurance is not through more regulation, mandates and cross-subsidies. With the exception of education, health care is already the most highly government-dominated industry in the US. It’s no coincidence that it’s also one of the most dysfunctional. I laid out the path forward in “Boomergeddon.” The first place to start is eliminating the tax preference for employment-based health insurance. Putting the employer in the mix creates an entitlement mentality on the part of workers, divorcing them from the costs of their lifestyle and medical decisions. Also, it makes insurers compete for business by packaging plans that appeal to employers, not to patients. Obamacare only reinforces this insanity.