The bungled roll-out of the website used by Americans who want to enroll in the new Health Insurance Marketplaces under the Affordable Care Act (ACA) has obscured the fundamental reasons why the U.S. must make health reform work: a vital component of a modern economy is comprehensive, affordable, and portable health coverage. These marketplaces, coupled with ACA insurance market reforms, can meet this need through subsidies, benefit guarantees and the assurance that workers can take their coverage with them when they changes jobs or lose a job.
Those who would blow-up the ACA without a viable alternative would leave the U.S. with a job-based health insurance system that is rapidly deteriorating. The proportion of people with employer-sponsored health insurance declined by more than 10 percentage points over a decade. Employers of all sizes are shifting larger shares of premium costs to employees, and raising employee out-of-pocket obligations. Some firms are dropping dependent coverage, while insurers are limiting covered services and provider networks. Some large companies are opting to join "private health insurance exchanges" where they can transform health insurance from defined, comprehensive benefits to defined contributions, much as they have converted pension programs into fixed-contribution IRAs over the past two decades. This will shift more of the insurance cost to workers, leading some to turn it down.
The new ACA health insurance marketplaces can provide affordable coverage to the people who have been jettisoned from the employer-based insurance system.
The work force has also been shifting for many years away from jobs that provide comprehensive employer-sponsored insurance. Four years into a tepid U.S. economic recovery, we still had 10.4 million unemployed workers in December. Another 7.8 million people were working part time in December who wanted to work full time, and most part-time jobs provide no health insurance. An additional 2.4 million people were "marginally attached" to the work force — they say that they want a job and have looked for work in the past 12 months although they are not currently actively looking for work. In total, some 20.6 million people are unemployed or under-employed, and most have no health coverage.
While job growth has picked up somewhat this year, a closer look at the sectors providing the most new jobs spells further trouble for employer-based coverage. Of the 183,000 new jobs on average during 2013, a large proportion was added in sectors such as retail trade and leisure and hospitality. Many of these jobs bring no health benefits.
Employers are also turning to temporary jobs and contracted labor for many jobs that were previously done by regular employees. One reason: wages only, no health insurance.
Further, for several decades unions pushed for and won comprehensive, affordable health coverage in their collective bargaining. But union membership reached a record low of 6.6 percent of private U.S. jobs this past summer.
American workers are disappearing from the labor force in record numbers. In fact, 720,000 workers dropped out of the labor force in October, and another 347,000 exited in December. The U.S. labor force participation rate fell to 62.8 percent in December, the lowest in 35 years. Some of those leaving the labor force have publicly sponsored health insurance, but many are uninsured.
Moreover, most Americans change jobs, if not careers, several times during their working years. It makes no sense in a modern economy for workers to lose or have to change health coverage with each labor market transition. Nor is it good for the economy when workers are forced to keep a job they do not like for fear of losing health coverage. Health insurance marketplaces will assure that people who change jobs or change family status do not lose their health insurance — these "exchanges" will facilitate just the sort of portable coverage that a modern economy requires. This is the key issue — rather than how long it will take to fix the enrollment websites.
ACA has some significant limitations. There is insufficient cost control. The law provides inadequate incentives to create a health care work force that is big enough and has the right mix of skills to meet the needs of an aging society. The federal government continuously issues a blizzard of overly complex regulations that leave too little flexibility for states and the private sector to innovate.
But this means that the US must build on and improve ACA, not blow it up. Improving ACA and making it work will make our population healthier, lower health care spending that will free up resources for other vital needs, and give us the mobile and flexible work force we need to compete in a global economy.
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