Ever wonder how health insurance came to be married to employment?

As health care expenses began to increase in the 1920s, new markets among the middle class opened, and insurers began to experiment with employment-based plans. Since health care involves more uncertainty than other forms of insurance, risks and costs had to be minimized. 

Getting employers to deduct premiums from paychecks greatly reduced collection costs, and policies could be restricted to the employed, who tended to be healthier than the general population. Businesses with low rates of illness and injury got premium discounts through an “experience rating.” 

This “fringe benefit” helped build worker loyalty, particularly during World War II when wages were frozen.  In 1954, the system became entrenched when the IRS declared that employers’ contributions to health benefit plans were tax exempt.  

While this system benefited the fully employed and provided a massive tax break for corporate America, it hurt the retired, the unemployed, the self-employed, and those working for small businesses or in low-wage jobs without fringe benefits. 

Individual policies became much more expensive both because of “community ratings,” based on the remaining population, and because the employment-based system stimulated health care cost inflation. 

However, many families suddenly could afford more medical care, providers had a guaranteed payment source, hospital beds filled to capacity, and today 20 percent of American health care costs are paid by employers.  Over 17 percent of our GDP goes to health care, the highest in the world. 

So the question is: Does this system of employer-based health care financing still make sense? HB 1026 would provide a single-payer alternative for Washington state. Under this bill, health care financing would be divorced from employment.  All deductibles, premiums, co-insurance, annual renewals, unintelligible contracts, confusing marketing spins, limited provider networks, and inconsistent employee coverage would disappear.  

This bill will likely go before the state Legislature as a referendum during the next session. Both Oregon and California, as well as 12 other states, are considering similar Medicare For All-type plans in response to congressional inaction on a federal plan (HR 676).  

In reducing the multiple, mostly for-profit payers to a single payer (either a government agency or a strictly regulated nonprofit entity) and covering all residents, the risk pool is maximized while duplicative administrative expenses are greatly reduced.  

In this way, everyone should get much better health care for far less money than what we currently are paying.  Employer benefits include the elimination of annual insurance company negotiations and a healthier work force.  It would lower human-resource costs, eliminate the unpredictability of changing insurance rates, and lower state Department of Labor & Industries assessments.  

The experience of most other developed nations and recent articles in leading medical journals available through Physicians for a National Health Program (pnhp.org) attest to the accuracy of these statements.  Health care justice and efficiency aren’t as far off as it might seem, but it will take some real citizen courage to move it forward.

Cris M. Currie, who lives in the Mead area, is a retired registered nurse and an active member of Healthcare For All-WA.