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.
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David Gewirtz | BIO
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.