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Why having a job makes it more likely you have health insurance

Erika Beras Nov 6, 2020
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A student gets a COVID-19 test at a pop-up testing site in New York City in October. Angela Weiss/AFP via Getty Images
COVID-19

Why having a job makes it more likely you have health insurance

Erika Beras Nov 6, 2020
Heard on:
A student gets a COVID-19 test at a pop-up testing site in New York City in October. Angela Weiss/AFP via Getty Images
HTML EMBED:
COPY

It’s that time of year where people are shopping around for health insurance plans. That can mean looking at the health care marketplaces or assessing Medicare plans. Or looking at the options an employer provides during open enrollment season. About half of Americans get their insurance through an employer — but why? 

“The story that you most often hear is that employers were offering fringe benefits,” said Christy Chapin, a history professor at the University of Maryland, Baltimore County. 

During World War II, amid stiff competition for employees, benefits were a valuable recruiting tool, due to a federally imposed wage cap. “That story is almost right but not quite really, the most important factor for the reason we receive our health care benefits through our employers is the tax write-off,” she said.

Chapin said businesses liked that tax write-off and offering health insurance was a strategy to hopefully keep employees. “They are thinking if they are providing health care benefits to their employees, their employees will be more loyal to them than to the unions,” said Chapin. 

In the years after World War II, employee-based health insurance became the norm as medical care expanded, consumer spending boomed and payrolls swelled with workers who enrolled to get their “fringe benefit.” Left out? Black workers, who were discriminated against in the job market, unmarried women and small business owners.  

Meanwhile, Europe’s post-war economies were devastated, according to Aaron Carroll, a health services researcher at Indiana University’s School of Medicine.

“The idea that the private sector was going to take care of the health care system was not going to happen, which is why so many public systems arose there. And we came out of it with a very different health care system that was built and operates very differently. But that’s not because of the founders. And it’s not because of the Constitution or America. It’s a quirk of history and then IRS policy,” he said. 

Eventually, the U.S. did establish Medicare for older Americans and Medicaid for Americans with disabilities or limited incomes. Carroll said that still left much of the population dependent on a system built for a very different type of workforce. 

“The idea that you would take a job and stay with it for four decades is an old idea,” he said. 

And all along, health care costs kept rising.

In 2010, President Barack Obama signed the Affordable Care Act into law. One of the ACA’s goals was to relieve “job lock” so people don’t feel tethered to an employer just for the health insurance. “People can’t take that kind of gig economy-type job without being able to have some other way to get health insurance,” said Cynthia Cox with the Kaiser Family Foundation.

The ACA was written assuming most people would get insured through their employer. But in the last eight months, 7.7 million people have lost jobs — and including family members, that may be 14 million more people now without employer-based insurance. 

“This will be the first true test of whether the ACA works as a safety net for people who lose employer coverage,” Cox said. 

COVID-19 Economy FAQs

So what’s up with “Zoom fatigue”?

It’s a real thing. The science backs it up — there’s new research from Stanford University. So why is it that the technology can be so draining? Jeremy Bailenson with Stanford’s Virtual Human Interaction Lab puts it this way: “It’s like being in an elevator where everyone in the elevator stopped and looked right at us for the entire elevator ride at close-up.” Bailenson said turning off self-view and shrinking down the video window can make interactions feel more natural and less emotionally taxing.

How are Americans spending their money these days?

Economists are predicting that pent-up demand for certain goods and services is going to burst out all over as more people get vaccinated. A lot of people had to drastically change their spending in the pandemic because they lost jobs or had their hours cut. But at the same time, most consumers “are still feeling secure or optimistic about their finances,” according to Candace Corlett, president of WSL Strategic Retail, which regularly surveys shoppers. A lot of people enjoy browsing in stores, especially after months of forced online shopping. And another area expecting a post-pandemic boost: travel.

What happened to all of the hazard pay essential workers were getting at the beginning of the pandemic?

Almost a year ago, when the pandemic began, essential workers were hailed as heroes. Back then, many companies gave hazard pay, an extra $2 or so per hour, for coming in to work. That quietly went away for most of them last summer. Without federal action, it’s mostly been up to local governments to create programs and mandates. They’ve helped compensate front-line workers, but they haven’t been perfect. “The solutions are small. They’re piecemeal,” said Molly Kinder at the Brookings Institution’s Metropolitan Policy Program. “You’re seeing these innovative pop-ups because we have failed overall to do something systematically.”

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