About Amy Umble:
Amy Umble is health reporter for The Free Lance-Star

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Job-based insurance may be on way out

Of all the changes contained in the health care legislation that passed Sunday night, the one that intrigues me the most is the one that requires most employers to pay a fee if they do not provide health insurance to their workers. If those workers get a government subsidy when they buy insurance on their own, their employer has to pay a fee of $2,000 per worker. 

The fee would not apply to the first 30 workers, so a company that employed 100 people and did not sponsor a health insurance plan would pay $140,000 (100 minus 30 times $2,000).

My guess is employers are looking at this provision today and saying, “I’ll take that deal.” For many, the cost of the fee will be less than the cost of insurance. Here at The Free Lance-Star, the company pays a minimum of $4,400 per employee, per year for coverage. The cost is higher when the employee buys a family plan.

Given these numbers, I can see that employers might offer a health insurance voucher or payment to employees to stay competitive with other businesses. But with health care costs increasing, wouldn’t employers jump at the chance to get out of the middle and let employees buy their own insurance?

Today about 60 percent of nonelderly Americans get their health insurance through their job or a family member’s job. With this law, it seems that we’re seeing the beginning of the end of this employer-based system. That may or may not be a good thing, but it bears notice as a historic change.


  • 02FirebirdTA

    You are absolutely correct. This will trend employers away from providing health insurance as a standard benefit. As you said, do the math. My employer portion of my single +one is well over the 2k fine, Cutting out health insurance will allow them to cut admin and support costs on the backend. Makes you wonder what benefits are going to be next.

  • kgpmom

    It is an historic change – but it’s not just simple math. Employer-sponsored health benefits evolved as a way to secure and retain employees. Based on the reactions I’ve heard to the concept of any government sponsored insurance, companies that offer private insurance will still be viewed favorably by prospective employees. Look at it this way – they don’t have to provide it now, but they do. They won’t have to provide it in the future, but if they don’t, they’ll have to pay anyway. Why not pay AND get the HR bonus of offering an attractive benefit to employees? This depends a lot on just how expensive insurance gets. For all employers, there is (or has been, or will be) a point at which they say “enough!”

  • stonewall park

    I wonder if I form other companies and keep my numbers down would i beat the system? I will have to ask my lawyers they will get me and my friends off the hook.If not we can just put the people out of work. Downsizing is always good it helps the bottom line anytime you can cut waste.