Job-based health insurance vanishing in AZ

The Arizona Republic

For decades, most Americans have counted on their employers for health insurance.

But that system is crumbling, and it's crumbling faster in Arizona than it is elsewhere in the nation.

Fewer than half of the state's residents are insured through an employer's plan, one of the lowest levels in the country. The rate of employer-based health coverage is falling in Arizona faster than in the nation as a whole.

Job-based insurance took hold during World War II as companies offered health benefits to attract scarce workers. Encouraged by federal tax breaks, job-based benefits soon became the financial foundation of the U.S. health care system, eventually covering more than two-thirds of the population.

Rising health care costs and the competitive pressures of the world economy have chipped away at that system. Now, slightly more than half of Americans have insurance through a job, a number that has been declining steadily since 2000.

In Arizona, the percentage of residents with job-based insurance fell from 55 percent in 2000 to 48 percent in 2004, according to an analysis this fall by the Kaiser Family Foundation.

Almost 1 million Arizonans were without insurance in 2004: about 20 percent of the population under age 65, one of the highest levels in the country. And more than 1 million residents get their insurance through the state's Medicaid program, costing state and federal taxpayers more than $5 billion per year.

"We have a real serious problem in this state," said Bradford Kirkman-Liff, a professor of health policy at Arizona State University. "I think the job-based system is clearly no longer viable."

The federal government predicts health care costs will nearly double again in the next decade. Corporate executives, union officials, economists and political leaders are warning that the job-based insurance system is no longer sustainable. Many Americans cannot qualify for or afford private insurance on their own.

Without drastic changes, many experts predict that a major crisis affecting the majority of Americans is not far off: more middle-class families without insurance; unprecedented strain on hospitals and other health care providers; the fiscal collapse of public health care programs.

"There is a huge collision on the horizon between the forces that are driving medical costs up . . . and the ability to pay for health insurance," said Paul B. Ginsburg, president of the Center for Studying Health System Change, a nonpartisan policy research group in Washington, D.C.

Increasingly the discussion about our health care crisis is on how to replace the financial foundation that job-based coverage once provided.

When America's job-based insurance system took hold in the 1940s, most European nations had already created national health systems. In the United States, several attempts to do the same failed, attacked by doctors who feared government intervention in their practices and others who said it smacked of socialism. So the government promoted job-based benefits through tax incentives. (Employer contributions to health insurance premiums are tax-deductible for employers and tax-exempt for employees.) Today, the United States is the only industrialized nation in the world that depends on employers to finance the medical needs of most of its population.

The U.S. job-based insurance system has always been subject to fluctuations in the economy and has never been able to provide coverage for everyone. Historically, job-based health coverage expanded in good economic times and declined during recessions.