How an Evolving U.S. Workforce Poses Challenges for Employer Based Health Coverage By Nicky Riordan

Inherent in the current debate over reform of U.S. insurance markets is the argument that the majority of Americans receive coverage through private, employer-based plans and therefore have little to lose. 72 percent of civilian workers had access to employer-based health coverage with a take-up rate of 74 percent, and politicians on both sides of the aisle tend to value and defend employer-based coverage, despite its current pitfalls and uncertain future feasibility.

The Affordable Care Act (ACA) imposed new requirements on larger employers to offer insurance benefits and created tax credits to incentivize small businesses to do the same. Congressional Republicans recently removed provisions from their bill that would have capped the untaxed benefit of your employer-sponsored health insurance, thereby making it less competitive in a marketplace. These decisions reflect a desire to shore up the employer-based standard and remove potential customers from the marketplace and public assistance programs like Medicaid.

The problem with this reliance on the existing system is that the workforce is changing rapidly and the future feasibility of employer-based insurance is uncertain. The Bureau of Labor Statistics predicted that millennials would overtake majority representation in the workforce by 2015, and will make up 75 percent of the workforce by 2030. The jury is out on whether this generation is less likely to keep a job over the long term, but recent surveys suggest that they are more open to regular job changes.

Deloitte’s 2016 Millennial Survey found that 64 percent of U.S. millennials expect to change jobs in the next five years, and Gallup data shows that 36 percent report the desire to look for a new opportunity if the job market improves. Moreover, this generation already makes up 30 percent of the growing independent workforce in the U.S., and an uncertain job market has led to more young people relying on “gig” work that does not come with health insurance options.

Continuous job changes and lapses in coverage mean continuous insurance and primary care disruption as most companies offer different plans with different providers. Individuals without continuous health coverage are less likely to have an established routine for medical care and use health services while insured. This suggests the evolving workforce is unfit for the current employer-based coverage system and that reluctance to adapt will result in poorer health outcomes and insurance utilization among the population that is most needed to reduce healthcare costs overall.

Whether it's Republicans arguing for a more deregulated and competitive marketplace for private insurance across state lines, or Democrats promoting the need for universal single-payer; each side would be wise to highlight the pitfalls of employer-based coverage as a catalyst for change, rather than continue to depend on its dominance as a failsafe to the system as a whole.

Nicky Riordan, Political Analyst, The Utica College Center of Public Affairs and Election Research