Americans: Insured, But By Whom?

In the United States, most people are insured through their employer, with 54-55% of the population covered by employment-based insurance. However, this number has been declining in recent years, with more people turning to non-employer-based insurance. The number of uninsured people in the US has been a significant concern, with approximately 30 million people without health insurance in 2019. The COVID-19 pandemic and subsequent safety nets put in place by the Affordable Care Act (ACA) helped reduce this number, with a downward trend continuing into 2022.

Employment-based insurance is the most common type of insurance

The significance of employment-based insurance lies in its ability to provide financial protection and access to healthcare services, helping employees maintain their health and well-being. It reduces the financial burden of medical expenses, offering peace of mind and ensuring employees can seek necessary medical care without incurring exorbitant costs. Employers also benefit from providing health insurance as it can attract and retain top talent, boost employee morale and productivity, and potentially enjoy certain tax incentives.

In 2023, the average annual premium for single coverage under employer-sponsored plans was $8,435, and for family coverage, it was $23,968. Employees typically contribute about 17% of the premium for single coverage and 29% for family coverage. Additionally, the average deductible for those with single coverage and a general annual deductible was $1,735 in 2023.

The distribution of health plan enrollment for covered workers by plan type and firm size varies. Preferred Provider Organization (PPO) plans are the most common type of health insurance provided by employers, with 47% of all firms offering them in 2023. High Deductible Health Plans with Savings Options (HDHP/SO) are also popular, offered by 29% of firms. Health Maintenance Organization (HMO) plans are provided by 13% of firms, while Point-of-Service (POS) plans are the least common, offered by only 10% of firms.

The size of the company and the industry it operates in significantly influence the coverage available in employer-sponsored health insurance plans. Larger companies often have more negotiating power to secure comprehensive coverage with lower premiums, while smaller companies may offer more basic plans with higher deductibles and copayments.

Employment-based health insurance has a long history in the United States, dating back to the early 20th century. Various unions, mutual aid societies, fraternal organizations, and employers played a role in developing early forms of health insurance. During World War II, a ruling by the War Labor Board allowed employer contributions for employee health benefits to circumvent wage controls, leading to a tripling of health coverage. The Employee Retirement Income Security Act of 1974 further solidified the role of employment-based health benefits by preempting state regulation of self-insured employer-sponsored health plans.

While employment-based insurance is the most common type of insurance in the United States, it is not without its challenges. Rising healthcare costs put pressure on employers to balance coverage with affordability. Administrative burdens, regulatory compliance, and meeting diverse employee expectations are also hurdles employers face in maintaining coverage. Despite these challenges, employment-based insurance remains a crucial component of the US healthcare system.

Private insurance is more prevalent than public insurance

Private health insurance is provided by private companies and is often offered by employers as part of their benefits package. It can also be purchased individually or through the Affordable Care Act (ACA) marketplace. Private insurance is more flexible than public insurance, giving policyholders more options for doctors or medical facilities to visit. There are also more private insurance plans on the market, providing policyholders with a wider network of providers to choose from.

On the other hand, public health insurance is provided by the government and is typically available for low-income individuals, families, the elderly, and those who qualify for special subsidies. The primary public health programs in the US include Medicare, Medicaid, and the Children's Health Insurance Program (CHIP). Public health insurance is more affordable than private insurance, with lower administrative costs and often no co-pays or deductibles. However, it is less flexible, as policyholders usually have a limited selection of medical service providers. Many medical establishments still refuse to accept government-sponsored health insurance plans.

The debate over whether public or private insurance is more economically efficient is ongoing, especially since the Affordable Care Act (Obamacare) was instituted in 2010. While private insurance is more prevalent, the high cost of healthcare in the United States remains a significant concern, with around 30 million people uninsured in 2019.

The uninsured rate is decreasing

The uninsured rate in the United States has been on a downward trend since the coronavirus pandemic. In 2022, the number of nonelderly uninsured individuals dropped by nearly 1.9 million from 27.5 million in 2021 to 25.6 million, and the uninsured rate decreased from 10.2% in 2021 to a record low of 9.6%. This decrease in the uninsured rate is largely due to the coverage expansions put in place by the Affordable Care Act (ACA) and pandemic-era policies that protected low-income individuals from coverage losses.

The ACA's coverage expansions, including Medicaid expansion and subsidized Marketplace coverage, served as a safety net for people who lost their jobs or faced economic and coverage disruptions during the pandemic. Additionally, continuous enrollment for Medicaid enrollees and enhanced Marketplace subsidies further contributed to the decline in the uninsured rate. These policies improved the affordability of private coverage and protected people from losing their coverage during the pandemic.

The decline in the uninsured rate was also driven by increases in coverage among nonelderly adults, particularly among American Indian, Alaska Native, and Hispanic people. From 2019 to 2022, the uninsured rate for American Indian and Alaska Native people decreased from 21.7% to 19.1%, while the uninsured rate for Hispanic people decreased from 20.0% to 18.0%. The number of uninsured children also decreased, with 4.2% or 3 million children lacking health insurance in 2022 compared to 5.1% or 3.7 million in 2019.

The decline in the uninsured rate was observed across most states, with 34 states experiencing a decrease in the number of uninsured individuals from 2019 to 2022. However, it is important to note that the uninsured rate remains higher in non-expansion states compared to states that expanded Medicaid under the ACA. In 2022, adults in non-Medicaid expansion states were twice as likely to be uninsured as those in Medicaid expansion states.

Despite the overall decline in the uninsured rate, racial and ethnic disparities in coverage persist. In 2023, almost one in four Hispanic adults aged 18-64 lacked health insurance, a higher percentage than Black, White, and Asian non-Hispanic adults. Additionally, noncitizens are more likely to be uninsured than citizens, with recent immigrants having a higher uninsured rate than those who have lived in the US for a longer period.

The decrease in the uninsured rate during the pandemic is a positive development, but it is important to note that the end of the Medicaid continuous enrollment provision in March 2023 may reverse these gains. Efforts to increase outreach and enrollment assistance can help eligible individuals retain or obtain coverage, especially in states that have not expanded Medicaid.

People without insurance often face unaffordable medical bills

People without health insurance often face unaffordable medical bills when they seek care. This is because they have to pay for almost 40% of their care out-of-pocket. Hospitals frequently charge uninsured patients higher rates than those paid by private health insurers and public programs. Uninsured nonelderly adults are much more likely than their insured counterparts to lack confidence in their ability to afford usual medical costs. Over eight in ten (85%) of uninsured nonelderly adults say they have difficulty affording health care costs, compared to 47% of adults with insurance.

Unaffordable medical bills can lead to medical debt, particularly for uninsured adults. More than six in ten (62%) of uninsured adults report having health care debt compared to over four in ten (44%) of insured adults. Uninsured adults are more likely to face negative consequences due to health care debt, such as using up savings, having difficulty paying other living expenses, or borrowing money. Beyond the significant financial consequences of having debt, two-thirds of uninsured adults with health care debt say they have had to make difficult sacrifices, such as eating less, changing their housing situation, or increasing work hours to pay down their debt.

The high cost of insurance is the main reason why many are uninsured. In 2022, 64% of uninsured nonelderly adults said that they were uninsured because the cost of coverage was too high. Many uninsured people do not have access to insurance through their jobs, and some people, especially poor adults in states that did not expand Medicaid, remain ineligible for financial assistance for coverage. Additionally, undocumented immigrants are ineligible for federally funded coverage, including Medicaid or Marketplace coverage.

The US is the only industrialised nation without universal healthcare

The US is an outlier among industrialised nations, and the question of why this is the case is a complex one. There are historical and cultural reasons, as well as structural and political reasons.

Historical and Cultural Reasons

Americans have long held more negative attitudes about government than people in most other countries, particularly other democratic countries. This dates back to colonial times, when only the most adventurous or desperate would brave the unknown. Later, waves of immigration were made up of those fleeing political revolt and rebellion, or those who had dodged the draft. Many immigrant groups also defined themselves in opposition to established churches. This history has contributed to a culture that is less accepting and respectful of authority, and more individualistic and independent.

Another factor is the absence of a traditional aristocracy and the attendant social hierarchies in the US. Without a self-identified working class, there is no labour party and no national health insurance. This is further complicated by the historical cleavage of race in American politics. Black and White workers have never united in a large-scale political movement, and Southern Democrats, a voting bloc that was uniformly segregationist, ensured that federal programs were controlled by the states, and often added qualifications to federal laws with discriminatory intent.

Structural and Political Reasons

The US Constitution, designed by James Madison, is structured so that policies that would redistribute resources from the wealthy to the poor are almost impossible to effect. The division of powers and the differences between the Senate and House of Representatives are part of this design.

The US is a large, diverse country, without the religious, ethnic, or class identity on which national political movements can be built. As a result, US political parties are some of the weakest in the world, and money plays an outsized role in politics.

The US government has always been a major generator of wealth, and so political contributions can be evaluated in terms of return on investment. Groups with significant economic resources have long been opposed to universal health insurance.

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