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Health Insurance & Affordable Care Act

Is Workplace Health Coverage Dying?

Rising Costs Threaten the Future of This Traditional Employee Benefit

WebMD Health News

June 16, 2006 -- For decades, most Americans have gotten their health coverage at work, and 175 million still do. But with skyrocketing costs placing a drag on both families and companies, some experts say it's time to take health coverage out of the workplace.

The White House is leading the charge to decrease employers' role in medical insurance. The only problem, according to analysts, is this: If employers don't offer coverage, who will?

There are already signs that workplace medical coverage is on the decline. About 60% of Americans get their health coverage through an employer, 5% less than did five years ago, according to the Kaiser Family Foundation. At the same time, companies that do offer coverage are contributing less and less to premiums and other costs.

The system's worked well since World War II. But now, total health premiums for the typical family of four are nearly $11,000 per year -- a number that's expected to top $17,000 by 2010. More and more big companies are complaining that workers' health costs are hurting competitiveness, while a rising number of small businesses simply don't offer coverage at all.

With no major changes on the horizon in Washington to rein in costs, some experts are saying that the end of the employer-sponsored health system has arrived.

"It's collapsing in front of our eyes," says Andrew Stern, president of the Services Employees International Union. "We have to recognize that employer-based health care is ending. It's dying. It will not return," he said Friday at a forum sponsored by the Brookings Institution, a Washington think tank.

Declining Contributions

Stern points to President Bush's promotion of health savings accounts as a sign. Employers typically pay for a set amount of insurance, even if the cost goes up.

But health savings accounts let firms contribute a set amount of money to workers, not a set amount of benefits. As premiums go up, the employer contribution stays the same. And workers can be on the hook for the rest.

Stern is also critical of big companies like General Motors for not leading the charge to end employer-sponsored coverage and move to a new system.

The question is, what system could take its place? A government-run national health plan is about as popular as a sore throatsore throat in Washington. Lawmakers have failed for years to find a way to do anything about the 46 million people who already lack coverage.

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