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August 12th, 2009
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The Healthcare Hostage Crisis: The myth of employer-provided healthcare

Editor's Note: This article continues our 8-part series excerpted from the "Healthcare Hostage Crisis" chapter of AC360 contributor David Gewirtz's upcoming book, How To Save Jobs, which will be available in October. To learn more about the book, follow David on Twitter at http://www.twitter.com/DavidGewirtz. Last week we learned about the astonishing scope of the problem. This week, we debunk the prevailing belief that most companies provide healthcare benefits.

David Gewirtz | BIO
AC360° Contributor
Editor-in-Chief, ZATZ Publishing

Let's move on to employer-provided health care. According to the Blue Cross and Blue Shield Association, 63 percent of employers offered health benefits in 2008. As we'll see in a moment, the Blue Cross numbers leave out a lot of companies.

Among those companies with 200 or more employees who provide health benefits to active workers, 31 percent also provide health benefits to retired workers. Interestingly, part-time workers are increasingly screwed. In 2006, 35 percent of those companies that provided health insurance to full-time workers provided health insurance to part-time workers. Only two years later, by 2008, only 25 percent offered health insurance to part-time workers.

There's also a huge drop-off in coverage as the size of the company you work for goes down. Ninety-nine percent of those people who work for companies with more than 200 employees have been offered health insurance by their employer. But that drops precipitously as the employee count goes down.

By the time you get down to companies with 10-24 workers, only 78 percent have access to health insurance through their company. Of those companies with three to nine employees, only 49 percent offer any form of health insurance to their employees.

According to the Kaiser/HRET HRET Survey of Employer-Sponsored Health Benefits, 1999–2008, coverage varied considerably based on company size, the types of employees, how much they were paid, age, and more:

Firms with fewer lower-wage workers (where less than 35% of workers earn $22,000 or less annually) are significantly more likely to offer health insurance than firms with many lower-wage workers (where 35% or more of workers earn $22,000 or less annually). 68% percent of firms with fewer lower-wage employees offer health benefits, compared with 40% of firms with many lower-wage workers.

Firms with fewer part-time workers (where less than 35% of employees work part-time) are also significantly more likely to offer coverage to their workers than firms with many part-time workers. Among firms with fewer part-time workers, 67% offer health insurance, compared to 45% of firms with a higher percentage of part-time workers.

Firms that employ at least some union workers are much more likely than firms without union workers to offer health benefits to their employees. 99% percent of firms with union workers offer health benefits, whereas 60% of firms that do not have union employees offer health coverage.

Firms with a relatively small share of younger workers (less than 35% are age 26 or younger) are significantly more likely to offer health benefits than firms with a higher percentage of younger workers (66% vs. 40%).

What about the self-employed?

But what about the self-employed? According the Bureau of Labor Statistics, about 3/4ths of all U.S. firms have no payroll. They're classified as "non-employers," and certainly don't have access to employer-provided health insurance.

Unfortunately, we don't know how many people make their living at so-called non-employer firms, because business statistics aren't kept on these small businesses.

That's right. Neither the Bureau of Labor Statistics nor the United States Census Bureau keeps statistics on 3/4ths of all U.S. firms. That's even though non-employer firms have been growing much faster than employer firms since at least 1997 (also according to the BLS).

And why aren't 75 percent of all U.S. firms tracked? They don't make enough money to be important, at least according to the Census Bureau:

Because nonemployers account for only about 3.4% of business receipts, they are not included in most business statistics.

For the record, America's gross domestic product is about $14.2 trillion, according to the International Monetary Fund. Doing the math, that means that 3.4 percent of the business receipts in the United States is about $483 billion. I'd think it might be worth keeping track of any business group generating $483 billion, especially one comprising 75 percent of U.S. companies.

In any case, that means that more than 75 percent of all U.S. firms aren't counted in the statistics of the Bureau of Labor Statistics or the Blue Cross Blue Shield Association when it comes to health insurance. On top of that, of those 7.3 million companies considered employer firms, almost half employ nine employees or less.

So 75 percent of all U.S. companies aren't even in play for health insurance and of the remaining 25 percent, half of those are very small employer companies and only half of those offer health insurance. All told, only about 12 percent of U.S. companies actually offer health insurance to employees.

The prevailing belief here in America has always been that the "vast majority" of Americans get their health insurance from their employers. But that's not really the case. Back in 2007, a USA Today article quoted the Census, saying that about 60 percent of those Americans with insurance get that insurance from their employers. But since only about 85 percent of Americans have health insurance, the number of Americans who get health insurance from their employers is really closer to only 51 percent, a bare majority.

However - and this is interestingly relevant - we can't be sure exactly what the real percentage is, because almost all of the statistics published leave out self-employed individuals and those who are not in "employer companies" and not tracked - they roughly account for about 12 million people (divide the aforementioned $483B by an average $40K income).

So, yes, employers do provide insurance to many Americans, but it's barely a majority - and if more Americans lose their jobs, the number may soon be below 50 percent. That's part of why we have so many uninsured and under-insured Americans. A later installment will show that one of the issues with why people lose insurance is that once they get sick, they lose their jobs, and when they lose their jobs they lose their insurance - and that leads to the majority of health-related bankruptcies in America.

'Tis a mess. Employer-provided healthcare is a myth for most companies in America - and well may be a myth for most Americans relatively soon.

Next... How much does all this cost?

Follow David on Twitter at http://www.Twitter.com/DavidGewirtz.

Editor’s note: David Gewirtz is Editor-in-Chief, ZATZ Magazines, including OutlookPower Magazine. He is a leading Presidential scholar specializing in White House email. He is a member of FBI InfraGard, the Cyberterrorism Advisor for the International Association for Counterterrorism & Security Professionals, a columnist for The Journal of Counterterrorism and Homeland Security, and has been a guest commentator for the Nieman Watchdog of the Nieman Foundation for Journalism at Harvard University. He is a faculty member at the University of California, Berkeley extension, a recipient of the Sigma Xi Research Award in Engineering and was a candidate for the 2008 Pulitzer Prize in Letters.

soundoff (25 Responses)
  1. JOHNinCanada

    I think our system works well.....and I believe its cheaper for some companies to operate in Canada because they don't have to pay huge insurance premiums for their employees

    August 13, 2009 at 10:06 am |
  2. william

    i am from a poor village in african and seeking haelth for children are surfring no Education for them is really a pirty the children there need Education boy as now kthere is now Education so i am seeking for sone NGO .AOL orgenazation to help me take care of the children in my Village i will be very happy to have some repply

    August 13, 2009 at 9:05 am |
  3. Carol

    Joe is the only person I noted that actually included documentation about the content of the bill. We definitely need healthcare reform and coverage for all, but not THIS particular bill. I am 100% behind having the identical coverage for all Americans that Congress now has, and intends to keep(look it up-it's in the bill).It is FEHBP (that's private insurers that are federally regulated and insure federal employees). Our tax dollars cover 75% of the premiums.Yet, this is not the plan the rest of America is being offered and I have to question "Why not?" And PANSY-are you by chance related to Nancy Pelosi ? Your intelligent verbalization about your embarrassment over senior constituents actually voicing their concerns, had a familiar ring to it. Even you will be old one day-if your luck holds out.

    August 13, 2009 at 4:10 am |
  4. nea-nea

    The truth of the matter is that some of you dont want anything the President have to offer anyway because you just dont like him as a black man, and no everything is not about race. And then there are some all its about is me and mines, my 4 and no more the selfish way. But anyway IM PROUND OF THESE SENATORS AND THE PRESIDENT for trying to do the right thing no its not the perfect bill but whats wrong with trying to help people that are without. When a person gets turn down from coverage because they have a pre-existing conditon who do they turn to then can they turn to these protesters thats yelling and screaming MY QUESTION TO THOSE WHO OPPOSE HEALTHCARE REFORM WHO DO PEOPLE TURN TO WHEN THEY GET SICK AND CANT AFFORD HEALTHCARE COSTS?

    August 13, 2009 at 2:32 am |
  5. Hideaki

    Government should mandate non-profitable basic (minimum) coverage only. Insurance company should sell extra coverages. At the end, all citizen will be insured but can shop right coverage depend on each need.

    August 12, 2009 at 7:25 pm |
  6. Donna A. Reuter, Bremerton, WA

    If Congress would have done their job and complied with Article I, Section Eight, Clause One of the Constitution of the United States of America ("Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States") and passed legislation that gave every American national health care, this would not be an issue.

    The lack of nation health care in this nation is illegal under the Constitution of the USA.

    August 12, 2009 at 7:02 pm |
  7. Annie Kate

    I worked for 3 large companies and yes they did offer health insurance but the premiums and the coverage was vastly different at each of those 3 companies. For those in my family working for smaller companies the cost is higher and the benefits lower. So to say that employers provide health insurance to their employees is not the whole story and implies that all this insurance is created equal – its not. There was even variety between the companies on what illnesses and conditions they offered coverage for as well as what prescriptions they would pay for.

    I appreciate this article. The percentages were higher than I would have thought of companies offering health insurance but again, nothing was said that would differentiate the insurance offered by what was covered – I did not get the sense that some coverage was really good and some was in the "why bother" category. I hope your analysis includes something like this because the devil for this issue is very much in the details.

    August 12, 2009 at 7:00 pm |
  8. Donna Wood, Lil' Tennessee

    I for one don't want insurance from my employer, I'm told by others it's a nightmare! So I keep trying to find healthcare that I can live with. It's not easy but I'm still trying.

    Donna Wood
    Lexington, Tennessee

    August 12, 2009 at 6:03 pm |
  9. JASON

    Obama the socialist huessein meeting my expectations???? Not at all, This wanna be president hasnt filled any of the promises that he was canpaigning for several months ago. He has done nothing good for this country so far. The only things he has done is once again confirm he is a Racist by taking sides of a police altercation before knowing all of the story, he has established again that he is a young socialist yurning for total government control by taking over GM, he has blindly spent $700 Billion dollars or more on a non transparent deal in under a six month period, he is currently buying several billion dollar private jets for other house officials while cutting back on military defense systems for the home land in a critical time, is now pulling a dirty car salesmen approach on HealthCare to once again try to involve GOVERNMENT in our lives. THIS MORON of A PRESIDENT MUST BE STOPPED BEFORE THE US of A FALLS ON IT'S KNEES. IMPEECH OBAMA!!!!

    August 12, 2009 at 5:30 pm |
  10. earle,florida

    Anybody in their right mind realizes that employers will drop their healthcare benefit programs in favor of the government plan,a real no-brainer! Yet the government insist that it's a safety-net to fall (no more falling through the cracks) back on? The Insurance Companies don't discriminate as the politicians would have us believe,let me reiterate,they don't cherry-pick,but they do charge higher premiums for pre-conditions that are reasonable,and within most subscribers budgets,contrary to heresay. We don't need this "Healthcare Insurance/reform Act",period! We as a country, are mired in so many difficult, more pressing situations/issues,that to bring one more rediculous unnesessary quagmire into the fray is pure insanity. The beureaucracy that is accumulating reminds me of a "Lone Cow" in the a corn field laced with laxatives,where the trail of stinch calls on the,"Marching Czar's Army's" senses, the welcome sign of a victorious home-coming,for a job well done...? Wow nellie,..!

    August 12, 2009 at 5:25 pm |
  11. Rex Dungee

    I am retired military. Our medical care is government operated. While the current expense is $430.00 per year we get good coverage. Is this the type of coverage that the government offering to the rest of our citizen? If so, why don’t they explain it that way.

    On the Economy; If we want to really stimulated the economy push all the CEO's, from any and every company and all the millionaire's next door, to spend money in the US to profit someone else and God. Matt 25: 14-30 (read it).

    Rex D,

    August 12, 2009 at 5:13 pm |
  12. pansy

    "The BLUE HAIRS are embarrassing America over a necessity. Other countries are observing and it is rather embarassing to see BLUE HAIRS act so unintelligent."

    August 12, 2009 at 5:08 pm |
  13. george

    news media is adding to the foil by not clarifying the proposed plane ,for example are the illegals are cover in this health-care plane?
    are abortions are cover under this plane?and finial important note is what is the cost to a single individual and a family of one or two children?and since the people are divided on this topic ,why can we as democratic citizens vote for this bill???

    August 12, 2009 at 5:04 pm |
  14. pansy

    "Just like Grassley who is a Blue Hair who have upset more Blue HAIRS. People are wondering if they know they are embarassing themselves in front of the world.
    .Why are the BLUE HAIRS regressing from logical thinking? They talk about people as if they are animals that often get euthanize. Is it time for CDC(Center for Disease Control) or MENTAL HEALTH and SECRET SERVICE OR EVEN THE FBI to step in to assist with the BLUE HAIRS who are making things dangerous for AMerica becausse they are saying they want their country back. They have never owned America. It took EVERYONE to help build our country and it will again. They just need to slow down and connect the dots."

    August 12, 2009 at 5:02 pm |
  15. Wanda G

    With health care reform meetings looking like a Jerry Springer episode, I feel the issue is going to be grossly misunderstood outside of US borders. If the news reported on a similar incident in another country it would be viewed as an uprising, a civil war, or worst yet, a government in trouble needing military assistance. We live in an age of technology and are capable of getting issues discussed without taking risks.
    When Arlen Spector's space was invaded, I questioned his safety. Where was security? Does the media add fuel to the flames by being present? Why would anyone take that risk knowing the intent is resistance without resolution? The actions of angry mobs is getting more attention than the reasons reform is needed.

    When America has problems, its standard is held to a higher level of accountability. It looks as if democracy is not working. When that type of image is seen, or chaos is happening in the US one of two things happen; Americans living overseas are targeted for violence and in recent history, America itself has been the target, sometime by its own self inflicted terror. Its time to stop with the sensationalistic broadcasting and let's get serious about the health issue.

    For millions of people who never had end of life counseling, the reform will ensure they are provided some control over an inevitable outcome as opposed to being ignored, "made comfortable," or sedated until starvation and dehydration does the job.

    As health declines, so does the level of care everyone receives, and no isurance policy is able to make sure affordable health care will result in a high level of care from medical professions. Ask anyone who is enduring long term care and rehabilitation.

    August 12, 2009 at 4:24 pm |
  16. Fed Up

    Why don't they eliminate Workmans comp insurance and replace it with Health insurance................That would insure every worker in the United states.

    August 12, 2009 at 3:24 pm |
  17. Michael Legel

    And just because you have some form of insurance ... it doesn't mean you don't have huge deductibles, copays, and exclusions. We need to stop talking about Medical Mafia insurance and start talking about a real health care system instead of this insurance extortion racket we currently have.

    August 12, 2009 at 3:07 pm |
  18. Thom Tydeman

    David –

    You clearly have a command of the subject and the facts. Four questions:

    Q1. How many people are covered under plans from the 63% of companies that offer health benefits?

    Q2: How many different companies is a "typical" GenX or GenY employee projected to work in during a 30+ year career?
    My observation is that younger people change employers and even careers far more frequently than have I and certainly my father's generation. He grew up in the Depression, survived World War 2 and spent his life under the veil of security working 37 years for a single, large company. I'm a 52-year old who has worked in 3 careers spanning more than 10 companies.

    Q3: If future generations want the freedom to change jobs/careers more frequently, does it make sense for those employees to expect employers to provide health benefits?
    I have founded and owned or co-owned 3 companies in the past 15 years. Directly paying my employees health benefits made as little sense to me as directly paying their mortgages or car payments.

    In my opinion, encourging /enabling / mandating employers to offer healthcare benefits to employees simply perpetuates a grave shortcoming in our current system. It encumbers the employee's personal freedom and the competitiveness of the employer.

    Q4: Finally, what are your thoughts on how we can more effectively provide "leverage" for individuals seeking health insurance than having them participate in an employer/group sponsored plan?

    I learned a lot from your article and look forward to the next one.

    Thank you,
    Thom Tydeman

    August 12, 2009 at 1:34 pm |
  19. Eileen Howard

    I lived for two years in Canada and almost five in Australia. Both countries are clearly democracies and both countries have universal medical coverage. They are not “socialist” (whatever people mean by that silly label). In neither country did I have to wait for care for ailments (kidney stone, arthritis, physical therapy, among others) or for maternity care while pregnant or for health care for our children. In fact, in Australia there was much better healthcare integrated with non-traditional medicine. The government did not interfere in any health care decision whatsoever. Additional coverage beyond the basics could be purchased from insurance companies. These scary stories of the occasional wait for a doctor in Canada can be matched by a hundred stories of how US insurance coverage was cancelled for critically ill patients or stories of people not taking medications or cutting them in half because of the cost. One Canadian story I heard turned out to pertain to a rural isolated community in Canada that didn’t have enough doctors. Guess what? You can find exactly the same situation in the US in rural areas that don’t have enough doctors. We are all ALREADY PAYING for the lack of comprehensive health coverage with a higher percentage of our GDP than any other industrialized nation and with poorer results. Meanwhile, people spread misinformation and lies about the proposed healthcare reform. The costs of the uninsured are already being passed on to the rest of us who *are* insured. Who do we think is paying for this right now? We are!

    August 12, 2009 at 1:11 pm |
  20. Michael C. McHugh

    Back in the 1940s, all labor unions supported a system of national health insurance as Truman proposed, but the Republicans blocked it. LBJ had a large enough majority to pass Medicare/Medicaid in 1965, with some Republican support, but usually the Republicans have gone all out to block any real reform–using very familiar McCarthyite tactics. If Obama give sin to them like Clinton did, he will lose the chance to pass any major reforms in this generation.

    August 12, 2009 at 1:07 pm |
  21. joe

    Lets get serious – here is the truth from the pages of health care reform by Obama:

    Page 30, line 23 — There will be a government committee that decides what treatments you get.

    Mark Lennihan / AP

    Page 50, line 152 — Health care will be provided to all non US citizens, illegal or otherwise.

    Page 59, lines 21-24 — Government will have direct access to bank accounts for electronic funds transfer.

    Page 110, lines 13-18 — An excise tax (will be levied) on all goods from companies not offering government health care.

    Page 239, lines 14-24 — Government will reduce physician services for Medicaid. (Does this negatively impact the poor and elderly?)

    Page 304, lines 17-19 — Government does not have to protect your private information.

    Page 427, lines 15-24 — Government mandates programs for orders for end of life.

    Page 429, lines 10-12 — "Advance care consultation" may include an order for end of life plans.

    Page 438, Section 1236 — The government will develop a patient decision making aid program that you and your Doctor will use.

    Page 660-671 — "Doctors in Residency" – The government will tell you where your residency will be.

    August 12, 2009 at 12:49 pm |
  22. Charles

    I am continually amazed at the ignorance of so many americans. Here we are with a real chance to finally, after over 40 years, to provide all our people with health care. If people are foolish enough to let the insurance co’s and big pharma derail this opportunity, they DESERVE what they get… higher premiums, being dropped when they get ill, and the insurance co’s deciding what care you recieve.

    I understand the medical industry’s motovation… greed. They could care less about the suffering of so many. The GOP is bought and paid for by big business and would like to do away with medicare, social security and all safety nets for average people. What blows my mind is the working class people who support these amoral sleezbags! I guess they don’t have the sense to realize they are working against their own self interest. What a lousey excuse for americans and christians this bunch is.

    August 12, 2009 at 12:43 pm |
  23. Ron

    The problem that America is facing now is not socialized healthcare.
    The insurance industry has done a good job of refusing to pick up existing conditions. If Americans could have "existing condition" coverage, there would be very little to complain about.
    Suddenly, the insurance industry is creating all the chaos because they refuse to honor existing conditions.
    For their refusal, socialized healthcare is the only alternative to the needs of a changing America. The board of directors of these large industries should go to Capitol Hill and work this out with Congress, not their hit squad the Lobbyists and Rush.

    August 12, 2009 at 12:11 pm |
  24. robert c. maize

    "Cybertribualism" -my word
    an active example is happing now.

    A word “healthcare”
    Of course there will be others pop up

    I have spoke of "cybertribualism" -my word and this seems to prove that we have come to the level of "Cro-Magnon man" again as reason and the use of gray mater to stop, look, listen and reason to find solutions for direction for problem solving has reverted back to "grunting and clubs".

    We now have groups of electronic tribes that float mindless in cyberspace leaching to
    The emotional trash and garbage of the public relations and marketing gang of "if you have the price we will create professional lie's for you to prove what ever you desire" you provide the animal passion and meat eating hunger for the blood lust.

    It always benefits those that want money , power, and control.

    It seems we are still in the caves grunting and procreating like animals.

    There is hope as always that the gray matter and calm can see the light of truth will over power the screaming and bloodlettings of those that can only see fear and are afraid to step out into the knowledge of light and the ever changing truth of living,

    It is a walkabout we all take in this journey called life and it waits for no one
    This is what “freedom is all about” it is always your choice..

    I all have to say watching the actions of what I would call the lost souls it the ugly anger and hate trying to hide fear screaming and if they had a gun killing
    Some poor soul there looking for answers about their child dying or a senior there wondering if they should buy a pill or cat food to live.

    The animal in man is truly ugly.

    Of course this is just an observation of the great armadillo,
    Barrow A. Dillo

    August 12, 2009 at 11:40 am |
  25. Theresa

    How do you write someone at CNN about things that you know are questionable in the police / judicial system?

    August 12, 2009 at 11:33 am |