Employer-sponsored health insurance in the United States--origins and implications.

Varied as they may be, most U.S. readers of the Journal probably share at least one thing: employersponsored health insurance is vital to their wellbeing. For their part, most physicians, regardless of their field of medicine or where they practice, depend heavily on employer-sponsored insurance for their paychecks. Since increasing numbers of physicians today are employees of health care organizations, many acquire their own and their family’s health insurance in their workplace.1 In this regard, they have much in common with their patients. More than 159 million Americans — 62.4 percent of the nonelderly population — had health care coverage through employer-sponsored insurance in 2004.2 In other words, employer-sponsored insurance is a cornerstone of the U.S. health care system, as vital in some ways to the health care of Americans as the drugs, devices, and medical services that the insurance covers. Employer-sponsored insurance has been described as the equivalent of “private social security,”3 and if it were suddenly to disappear, chaos would certainly result: the health of patients throughout the United States would be jeopardized, and physicians’ income would plummet. This development is not, of course, imminent. But neither is the system of employer-sponsored insurance healthy and secure. It faces challenges that are unparalleled in its roughly 70-year history — including apparently unsustainable cost increases — and the ability of the system to cope with these challenges over the long term is far from certain. Understanding employer-sponsored insurance is therefore central to understanding the U.S. health care system and its evolution. In this first part of a two-part report, I attempt to further this understanding by exploring how the United States came to have an employer-based system of health insurance and how reliance on employer-based insurance affects the U.S. health care system generally. The second part of this report will discuss recent trends in employersponsored insurance, approaches that the providers of such insurance are taking to the problems they confront, and the probable future of this vital American institution.