During WWII, there was a shortage of workers, so salaries rose to attract workers. To prevent inflation, Executive Order 9250 was passed to freeze wages. To attract workers, employers used healthcare insurance to compete for workers. In addition, the Internal Revenue Service made employer-based health insurance exempt from tax in 1943. Therefore, it was cheaper to get health insurance through employers than other means. Employers providing health insurance may seem like a great deal, but this system has many flaws as, during the COVID-19 pandemic, many people who lost their jobs also lost their health insurance. With the shortcomings of our current healthcare system highlighted, we should look at alternatives to employer-based insurance.
Current Healthcare System In The U.S.
With employer-based insurance, there were many people who were unable to work or their jobs did not provide insurance. To fill in the gaps, Medicare and Medicaid were established in 1965, and others chose private insurance. Medicare provides healthcare to people 65 and older and disabled people and Medicaid serves low-income people. In 2018, The U.S. Census Bureau reported that 55.1% of people with insurance were employer-based and 27.5 million people did not have health insurance.
The U.S. spends about $3.5 trillion annually on healthcare, which is more than many developed countries. However, more people die from preventable and treatable illnesses than many developed countries. Not only does employer-based insurance have setbacks in individual lives when they are unemployed, but it also impacts the federal government. In 2017, tax cuts from employers with healthcare insurance benefits cost the federal government $260 billion in lost income and taxes. Our current healthcare system is expensive and ineffective.
Flaws of Employer-based Healthcare Highlighted During COVID-19
Healthcare was offered by employers to prevent wages from going up during a shortage of workers in WWII. This idea seems normal now, but it is ineffective. More than 40 million people are unemployed during the COVID-19 pandemic. The Commonwealth Fund found that “among people who reported job dislocation, 41 percent said they or their spouse or partner had insurance through the job” and “among these respondents, three in 10 were uninsured in May–June.” Our current employer-based health insurance is flawed because there is no support for people to fall back on, and these gaps are highly visible during the pandemic.
The current healthcare system is not working and has many people who are not covered by health insurance. Therefore, it needs to change because people should have equitable access to healthcare, especially during critical times of a pandemic. The U.S. is the only developed country without universal health care. While universal health care has pros and cons, the U.S. should consider implementing universal healthcare or some alternative of it. Healthcare is a human right, and we need to reform our current system.