The Impact of the Economic Collapse on U.S. Employee Benefits

Posted on Categories Health Care, Labor & Employment Law

Medical_symbol2 One of the less followed stories during the economic collapse is its potential impact on the employee benefits of employees in the United States.  Not only will workers lose a substantial part of their pensions because of the falling price of securities in their 401(k) accounts, but there might even be a bigger problem discussed in this article from Columbus Business First:

As a national debate over the future of the nation’s health-care system swirls, a new report from a liberal think tank indicates fewer working-age Americans, including Ohioans, are being covered under employer-sponsored health plans.

A briefing paper from the Washington, D.C.-based Economic Policy Institute, titled The Erosion of Employer-Sponsored Health Insurance, shows employer coverage for workers and their families dropped for the seventh consecutive year. About 63 percent of Americans, or 164.5 million, under age 65 were covered in 2007, about 3 million workers fewer than in 2000, during which about 68 percent were covered.

Employer-sponsored insurance coverage for working-age Ohioans fell at a similar rate over the decade. Last year, 6.8 million Ohioans, or nearly 69 percent, were covered by their employers, down more than 400,000 from 7.2 million, or 74 percent, six years earlier.

To the extent that employers are seeking to cut labor costs by pulling out of voluntarily adopted health benefit plans, there could be a domino effect which neither presidential candidate has grappled with: the demise of the employer-provided health insurance system in this country.

There will be two potential approaches that could result: an amendment of ERISA to require employers to provide manadatory health plans or a switch to a government-based system (one way would be to expand Medicare and Medicaid-type coverages to the entire nation). After having studied what a number of countries have done in preparation for my forthcoming, co-authored case book on Global Issues in Employee Benefits Law, I am of the opinion that a hybrid system would be best. Such a system would provide a base-level coverage for all Americans through the government and then additional coverage and services could be provided through mandatory employer-provided coverage.

Cross posted at Workplace Prof Blog.

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