Employer-based insurance originated in post-World War II America after the defeat of the national health insurance proposals during the 1930s to 1940s — a time when employers developed interests in offering group health plans on a large scale) The primary incentive for employers to offer health insurance to employees was tax breaks through federal subsidies, while the main incentive for employees to take the offer was guaranteed healthcare coverage. What was initially constructed asan attractant for employees, however, has become a potential financial burden for both the employers and employees; the rising cost of health¬care, increased working population, and other various socio-economic factors are now causing the disintegration of the system. Whether this disintegration is slow or fast is open to debate, but an interesting ethical question arises from our current situation: Is it just for a country to rely on employer-based health insurance as the main method of obtaining healthcare coverage for its average citizens?’

When we look at our current system of employer-based health insurance, we can clearly see that it presents numerous social problems — the fact that seasonal workers are not included in receiving employer health insurance and that some employers don’t even offer healthcare as part of the employment package, to name a few. I will not go into great detail on the extent of the social problems, but I would like to touch upon one result of these problems. The existence of inequality in the system of employer-based health insurance is causing the uninsured to stay uninsured. Since most of the uninsured are low income individuals who are not eligible for health assistance programs such as Medicaid, the lack of healthcare coverage, even for a short amount of time, can result in decreased access to healthcare in the future. This is a continuous cycle where once one becomes uninsured, any bad health will cause one to lose employment opportunities and thus, stay uninsured. As Ronald Dworkin claims, “Most people also agree that health care is unjustly distributed in America. Forty million Americans have grossly inadequate medical coverage or none at all, and many who now have adequate insurance will lose it, because they will lose their jobs or develop a disease or condition that make them uninsurable.”3 Because the uninsured are less likely to have regular access to healthcare and will be more likely to experience a decline in their overall health, they get trapped in this vicious cycle.’ While it may be logical to claim that the uninsured group consists mostly of illegal immigrants, who cannot obtain regular jobs with healthcare benefits, we find that this is not the case, as “the majority of the uninsured (81%) are native or naturalized U.S. citizens.’ Thus, this is a clear indication that our current system of relying on employer-based health insurance is inadequate. The big question, then, is the following: does this inadequacy suggest that the system is unjust?

To answer this question, we need to examine the ethical problems behind the employer-based health insurance system. One of the main ethical problems, highlighted by Dworkin in Sovereign Virtue, is that our current system is irrational.6 This irrationality is due to the fact that “the system makes choices for people that they would not make for themselves,” which takes away individual autonomy or right to choose one’s own path. This is a clear ethical problem in itself and essentially means that by relying on employer-based health insurance to cover many citizens, we are essentially coerced into making the choice to buy health insurance when some of us might not rationally make that choice if we were given other alternatives. This irrationality is engendered by the failure of our current employer-based system to provide us with the care we want at the prices we are willing and able to pay. This system also restricts our opportunities such that employees can become trapped into their current positions due to the need for healthcare benefits.’ While some may argue that people have the choice to acquire private health insurance, our current insurance market makes private insurance premiums very expensive. According to the Kaiser Family Foundation report on Health Research & Educational Trust, the average cost of health care premiums for a family in 2009 is $13,375. If a family does not qualify for Medicare or cannot join an employer-based insurance program, this cost would have to be paid out-of-pocket. Thus, many people simply do not have the financial means to procure private health insurance even though they have the option to.

Another important ethical issue concerns the unjust distribution of jobs that “spoil justice in the distribution of health insurance.” Nancy Jecker, Professor of Medical Ethics at the University of Washington School of Medicine, Department of Bioethics and Humanities, argues that because the distribution of jobs determines the distribution of health insurance for most citizens, an unjust system of job distribution will result in an unjust system of health insurance.’ The central example that Jecker gives is gender inequalities in employment; specific sectors of jobs can still be very much gender-structured. This gender inequity, while slowly eroding, is still especially prevalent in professions such as law and business. According to Jecker, the result is that “women health care access is reduced because women tend to work in lower-paying and lower-status jobs that offer fewer benefits, and they are more likely to work on a part-time, part-year basis,” thus contributing to their lack of insurance coverage.9 A counterargument to Jecker’s point could be that since most women are married and could potentially be put under their spouses’ healthcare plans, this inequality should be rather slim. While a valid point, this counterargument does not factor in unmarried females or female divorcees that account for a significant portion of this inequality.

A final ethical problem is what I call the “inflexibility” of employer-based health insurance. This “inflexibility” arises from the inability of employer-based health insurance to adequately cover employees at risky jobs. This “inflexibility” is an ethical problem because it has the potential to limit an individual’s quality of life. During periods of employment, the employee may become exposed to diseases or accidents, consequently impacting individual wellbeing. Thus it makes logical sense that in the working environment, employees should be covered in case something happens to them on the job. However, this “inflexibility” raises the question: to what extent should employers provide insurance? Employees in dangerous fields, such as mining and construction, are offered only standard — and often inadequate — healthcare coverage by their employers. Inadequate or inflexible healthcare coverage thus can limit one’s quality of life, making it an ethical issue.’ While private insur-ance for these individuals could be an alternative, it would be highly im-practical since it will likely be unaffordable for most middle class workers under our current system of private insurance. So then we must ask the following: is it justifiable for businesses to choose maintaining a level of financial profitability by only offering standard health insurance over providing more adequate health insurance for their employees that will be more expensive to maintain? Most employees would answer “no.” However, the businesses themselves are not necessarily at fault for this injustice, as the ultimate goal of any business is to maintain financial profitability, and certain cuts must be made to ensure stability even if it means firing employees or cutting benefits such as healthcare coverage. The real problem lies in how the employer-based health insurance is set up. Its “inflexibility” only allows for adequate coverage under normal working conditions and for standard employment such as office jobs where job-related risks are relatively low when compared to high-risk jobs such as mining or construction. As Nancy Jecker puts it, “the current system of employer-based health insurance arose through historical events and accidents, rather than through a deliberate and morally thoughtful process.”‘ Thus, a hastily created system like this cannot adequately adapt to the needs of different employees and work environments. This is not to say that all businesses should be required to offer health insurance; however, the extent of health insurance offered should obviously not be inflexible.

Since we’ve looked at the ethical problems presented above, it is important for us to now consider the advantages and disadvantages of alternatives that could potentially cut back our reliance on employer-based health insurance.12 By closely examining these alternatives, we can not only determine which strategy is most ethical, but also potentially incorporate positive aspects from each of these options to create a more complete, and ultimately more just system of health insurance for the general population.

The first alternative is the Oregon Basic Health Services Program in which a system of rationing healthcare service is provided for recipients in an expanded Medicaid program. It is a multi-tiered rationing system where recipients are given a pairing of illness and treatments ordered by importance that would be covered under the Medicaid program. Determining ranks of the illness/treatment pair is based on cost-benefit ratios where the lower ratios are not included on the list of services provided. When the system was put into effect in 1989, it offered universal coverage for basic care and greatly expanded the healthcare access to most Oregonians; however, several ethical issues arose. One main issue was how illness/treatment pairs were inappropriately ranked through the cost-benefit ratio analysis. This is how the now infamous appendectomy vs. tooth capping example arose, in which tooth cappings are ranked higher on the list of medical treatment and procedures than appendec¬tomies. The reason why this happened can be directly attributed to the linearity of any cost-benefit analysis. Because healthcare provisions vary vastly with different individual needs, cost-benefit rankings of illness/ treatment pairing are far too linear and algorithmic to accommodate for the complexities behind healthcare coverage and rationing.

Due to the fact that the illness/treatment pairing list featured a cut-off line where services with lower benefits were excluded, it was also difficult for Oregon law makers to determine where that cut-off line should lie. This brought up another important issue with the Oregon Basic Health Services Program, which Norman Daniels, Professor of Population Ethics in the Department of Global Health and Population of the Harvard School of Public Health, argues is that the program is unjust, because it actually hurt Medicaid recipients. According to Daniels, “If no new resources are added, the plan may make current Medicaid recipients worse off,” because the plan is a zero sum game with regards to resources.13 What this means is that because our healthcare provisions are greatly limited by scarce resources, any additions to the list of illness/treatment pair will mean the exclusion of another illness/treatment pair.14

The next alternative we will look at is universal healthcare cover¬age, defined as healthcare coverage funded by taxes and provided for all members of society. An example of an universal healthcare system is that of Canada’s, which is publicly-funded through taxes. Provided under the Canada Health Act, health services are mostly free and the Canadian government provides funding through public tax money. As Allen Bu-chanan points out, this system of “enforced beneficence” requires assis-tance from citizens to contribute toward a common goal for a society.15 The required assistance in this case would be in the form of taxation and the common goal would be a minimum level of healthcare. Buchanan argues that this form of enforced beneficence is “necessary to overcome the individual’s incentive to withhold contribution by imposing penal¬ties for his own failure to contribute and by assuring him that others will contribute.”16

Criticism of this system is mainly brought forth by conservative libertarians who declare that enforced beneficence is unjust because it violates moral rights through government interference and coercive taxes and supports something that not every citizen necessarily wants. A counterargument to the conservative libertarian views would be from a Rawlsian point of view, which would argue that a social contract is set up between the government and its citizens, and certain government actions that equalize the distribution of justice and are beneficial overall should be permissible.

Another alternative is a free market system of health insurance. A free market in healthcare would eliminate the need for employer-based health insurance and independent purchases of healthcare coverage. Ideally, this system would not only drive down the prices of insurance premiums by spreading insurance costs over more people, but would also allow individuals to make the choice of buying the healthcare coverage they could actually afford.

The practicality of free market systems has been widely criticized, most famously by Karl Marx, who claimed that free markets are dehumanizing. Marx noted that in a free market system, owners of capital have “superior bargaining positions” to manipulate prices at their discretion. As a result, everyone else in the system has little power to improve their own conditions and inequalities will compound and reinforce each other.17 With any free market system, even if it is for healthcare, there are various ethical problems. These problems, emphasized by Ronald Dworkin, are that 1) wealth is already unfairly distributed so very few people could actually afford adequate health insurance in a free market, 2) people oftentimes have insufficient knowledge about health risks to under¬stand their level of health and the type of coverage that is best suited for them, and 3) in a free market system, insurance companies can utilize an experience rating system where they can charge higher premium rates for people with greater health risks.’ Likely results of this system are that the poorest, who cannot afford adequate healthcare in the first place, will not be able to afford higher premiums and certain ethnic groups could be discriminated against due to higher susceptibility to certain diseases.

Per Lawrence Gostin, “the government cannot be expected to take responsibility for assuring the health of each member of the population… but the prevention of disease or disability and the promotion of health, within reasonable resource constraints, provide the preeminent justification for the government to act for the welfare of society.’,19 With all these issues in the free market system and employer-based health insurance, some like Gostin may argue that other social determinants such as governmental regulation could serve as a counterbalance to market-induced inequalities.’ This brings us to the last alternative, which is universal government-managed insurance. Similar to universal healthcare, what a system like universal government managed insurance does is it creates a way for citizens to pool resources and share risks.21 Though the government should not be held accountable for assuring equal health in a society, it should, however, have oversight as to prevention and promotion of health. What this entails is that the government must be responsible for managing health insurance so that an efficient system that works for the welfare of the nation is justly and properly administered and maintained, whether or not it is funded by public taxes or individual premium fees. Thus, blatant inequalities in our current employer-based health insurance, such as higher premiums for higher health risk workers, non-coverage for seasonal and part-time employees, and intermittent coverage from companies, can be abated with strong government actions and enforcement.

The prime example of a successful government-managed health insurance program would be the veteran’s healthcare plan administered by the Veteran Health Administration (VHA), a component of the U.S. Department of Veterans Affairs that serves as a part of its medical assistance program for veterans. According to famous demographer Phillip Longman, the VHA has evolved into “an industry leader in its safety and quality measures” of healthcare provisions. Longman explains that it is surprising to realize that “government bureaucracy is setting the standard for best practices while reducing costs, and it’s the private sector that’s lagging in quality.”‘ Whether or not this claim for quality is completely true is open to speculation, but one thing that the VHA has proven in the years it has been in existence is that it can be maintained by the government to serve for the welfare of a large group of citizens.

Despite the fact that the idea of universal government-managed healthcare seems to be just and would benefit most people, it does raise several questions and potential problems. John Farmer raises these questions in a blog entry from 2010: `Who can we best trust to oversee health insurance? The federal government, with its spotty records for efficiency… or private insurance bigwigs whose chief incentive is to increase profits in their own and their shareholders’ interest?”‘ Though Farmer harbors an obvious distrust in both the government and health insurance companies, he does raise a valid question: should we be allocating the decision-making process with regards to healthcare provisions and health insurance exclusively to one party? Looking from the point of view of a proponent of Oregon rationing, universal healthcare, or government-managed healthcare, the a similar aspect they all possess is the removal of these provisional decisions from the exclusive control of the health insurance market, which is what universal government-managed health insurance does. However, Farmer’s question is understood in another way, which is, should a third party even be involved in the decision-making behind healthcare provision and insurance decisions between a patient and doctor? We must determine whether it is just for any other entities besides the doctors themselves to intervene in order to determine the nature of healthcare provision and treatment. Morally speaking, I think it will be difficult to make the argument in support of intervention on the doctor’s job as a health provider; however, this raises another problematic situation in which doctors could potentially abuse their powers. The potential for a greedy doctor to order five rounds of X-ray scans decisions. This role can be fulfilled by the universal government-managed healthcare system. The system must not only have the ability to enforce health regulations, but also have general oversight of collection of payments and doctor’s accounting statements.

However, another concern behind this system is the age-old question of limited resources such that some might argue that the government simply does not have enough resources to adequately provide and manage health insurance for everyone. While it is true that resources are scarce for the newer medical treatment technologies, this is not the case for the more basic treatments technologies such as the MRI ma-chine or CT scanners.24 Yet, the United States was ranked 37th on the World Health Organization’s rankings of the world’s health systems in 2000, even though our Expenditure Per Capita was number one in the world. [k] So the question we should be asking is not whether we have enough resources to provide adequate care for everyone, but rather how we can efficiently use our current resources to provide adequate care for everyone. It seems that under our current system of employer-based health insurance, we are not efficient. Thus, we must have some sort of solution that restructures our system of healthcare provisions and eliminates inefficiencies in healthcare spending.

Straightforward solutions to this problem are to look back on federal spending, health insurance spending, and overall medical care costs, and then determine which unnecessary programs and procedures can be cut to improve overall efficiency. A counterargument to this would be that cuts will have to be made on other important programs such as education and defense. To this counterargument, my response is that public opinion through voting should then be used to determine which sector to cut instead of relying on public officials to determine
where to cut. Of course, these solutions may seem too idealistic and impractical to implement any time soon, but as Phillip Longman, Schwartz Senior Fellow at the New America Foundation, and formerly a senior writer and deputy assistant managing editor at U.S. News & World Re-port, asserts, “it is still worth thinking about how the private health-care industry [and employer-based health insurance] might be restructure to allow it to do what the VHA has done.”

Since we’ve looked at these major alternatives, we will now return to my previous point where a strategy that is most just needs to be determined. What we see is that major questions and problems arise in all of these alternative systems. However, some do appear to be more just than others. In my opinion, the universal government-managed health insurance system, despite its downsides, provides the fairest outcomes for citizens, just purely based on the facts that 1) no apparent moral rights could be restricted in this system,” 2) no inequalities could be maintained,26 and 3) benefits could actually be expanded.27

To further elaborate, I will briefly mention the Patient Protection and Affordable Care Act (PPACA) and the Health Care and Education Reconciliation Act of 2010. I believe these acts are good steps in the direction of creating a just system of health insurance, especially with its provisions of better coverage for those with pre-existing conditions, improved prescription drug coverage in Medicare, extension of the life of the Medicare Trust fund by at least 12 years, and its requirement for employers with more than 200 employees to automatically enroll employees into health insurance plans offered by the employer.” However, this current health care reform is also marred with potential problems such as raising healthcare costs and taxes on the middle class and increasing the national debt. Critics argue that these bills are unsatisfactory because they do not actually allow the general public to completely detach itself from its reliance on employer-based insurance and private insurance companies. A step in the right direction, as critics would argue, should be some sort of “public option” health insurance, that allows the government to operate its own health insurance agency that competes with both employer-based health insurance as well as private insurance. Critics claim that only through a government-managed program could we potentially lower the cost of insurance premiums for citizens since it would foster competition amongst healthcare providers and improve overall efficiencies in the healthcare market. It is entirely possible and even very likely that with a “public option” program run by the government, all the aforementioned improvements will happen; however, there are also some potential problems that arise from the “public option” system. One potential problem is that with any sort of competitive market, larger corporations still might have the competitive edge to meet consumer needs through superior services. A good example of this would be the postal industry where private companies such as FedEx and UPS compete with the federal government’s United States Postal Service (USPS). Recently, the USPS had to cut back greatly on its spending due to poor performance and negative net incomes while both FedEx and UPS still remained profitable.29 3) Because the USPS must still take on the burden of delivering regular mail while competing with FedEx and UPS on package deliveries, just like how the U.S. government would still have to take on the burden of providing Medicaid and Medicare while competing with large insurance companies if a “public option” plan were implemented, it is possible that this system could go down the same path that the USPS has gone and prove to be unsuccessful.

Another problem with any competitive market is that insurance companies might employ questionable tactics to retain customers and maintain a sustainable competitive advantage. Tactics employed by insurance companies such as increasing premiums and reforming denial of coverage policies after signing the contract greatly restrict customers’ benefits and autonomy. Additionally, with a competitive market, insurance could be more inclined to cut corners in order to lower the costs of healthcare provisions. The stated problem above is also true for a free market system; however, because the government has more resources at its disposal and greater bargaining powers, the positive aspect of a “public option” is a greatly lowered price of insurance premium. Whether or not this lower premium translates into a superior competitive advantage that overtakes employer-based insurance and private insurance is open to debate, but it is clear that even with the “public option” there are potential problems that must be evaluated before it is implemented.

Nevertheless, I believe it is useful to think of ways to incorporate positive aspects from each of the alternatives mentioned above to help reform our current system. This will provide us with a superior alternative that should be both just and beneficial for society. However, the ultimate goal of my paper was to examine these various systems and determine which one is the most just. In the end, it seems to me that the universal government-managed healthcare system is the most just because it is able to cover the most citizens in a nation, eliminate social inequalities in our current system of employer-based health insurance and private insurance, and potentially lower the cost of insurance premiums for those who need it the most.

 

Work Cited

Buchanan, Allen E. (1984) “The Right to a Decent Minimum of Health Care,” Philosophy & Public Affairs, vol. 13, no. 1 55-78.

Daniels, Norman. (1991) “Is the Oregon Rationing Plan Fair?,” JAMA: The Journal of the American Medical Association, vol. 265, no. 17 2232-35.

Dworkin, R. (2002) Sovereign Virtue: The Theory and Practice of Equality. (Harvard University Press).

Farmer, J. http://blog.nj.com/njv_john_farmer/2010/02/employer-based_health_care is.html

Jecker, Nancy S. (1993) “Can an Employer-Based Health Insurance Sys¬tem Be Just?,” Journal of Health Politics, Polig and Law, vol. 18, no. 3 657-73.

Gostin LO. (1994) “The effect of the health care system on the health of America,” Securing health or just health care? (St Louis Univ Law) J 39:7

Kaiser Family Foundation, The Uninsured: A Primer, Key Facts about Americans without Health Insurance, (Menlo Park, CA: Kaiser Family Foundation, 2008)

Longman, P.( 2005) The Best Care Anywhere. Washington Monthly 37:38¬48.

Powers M, Faden R. (2006) Social Justice: The Moral Foundation of Public Health and Health Polity. Oxford Press, New York, NY.

 

  1. Nancy Jecker, Can an Employer-based Health Insurance System Be Just?
  2. Average citizens in this case would generally be people who would not qualify for health assistance programs
  3. Pg. 307, Sovereign Virtue
  4. Kaiser Family Foundation: The Uninsured: A Primer
  5. Ibid.
  6. Pg. 311. Sovereign Virtue
  7. Nancy Jecker, Can an Employer-based Health Insurance System Be Just?
  8. In this case, it is employer-based health insurance.
  9. Pg. 665. Can an Employer-based Health Insurance System Be Just?
  10. An example of this would be how standard insurance plans only cover a few sessions of physical therapy per year. For someone who works in construction and is often subject to hard labor, this is not enough to cover for the 4-5 physical therapy session that he or she need to keep up with the strenuousness of his or her job.
  11. Pg. 670, Can an Employer-based Health Insurance System Be Just?
  12. As the main way to obtain healthcare coverage.
  13. Pg. 2232, Is the Oregon Rationing Plan Fair?
  14. The example that Daniels gives is if extrarenal transplants are removed from coverage and no higher priority services, unavailable before the plan, are added, then current Medicaid recipients will lose some services and the health benefits they produce.
  15. A. Buchanan, The Right to a Decent Minimum of Health Care. The example used by Buchanan is enforcing the rules of the road to drive only on the right side. The joint efforts of citizens are the goal of safe driving with coordination of requirements in the form of road laws.
  16. Pg. 69, The Right to a Decent Minimum of Health Care.
  17. M. Power, R. Faden, Pg. 100. The Moral Foundation of Public Health and Health Policy.
  18. R. Dworkin, Sovereign Virtue
  19. Pg. 3. Securing Health or Just Health Care? The Effect of the Health Care System on the Health of America
  20. M. Power, R. Faden, The Moral Foundation of Public Health and Health Policy
  21. According to M. Power and R. Faden, “all individuals within the pool (or someone on their behalf) make financial contributions, and only those with medical needs of the sort for which risk protection is provided draw upon the pooled resources. Large pools allow the insuring entity to spread the risk widely, thereby minimizing the risk of financial ruin.”
  22. P. Longman, The Best Care Anywhere.
  23. John Farmer, http://blog.nj.com/njv_john_farmer/2010/02/employer-based_health_care _is.html
  24. According to Organization for Economic Co-operation and Development (OECD) Health Data 2010, the United States had the 2nd most MRI machines per million populations while Japan had the most. This is five times more than the United Kingdom’s MRI machines per million populations. Some of the other categories that the U.S. takes the lead are total expenditure on health per capital (PPP) (1st), Mammographs per million populations (3rd), and the number of active professional nurses per million populations (4th).
  25. Compared to universal healthcare with enforced beneficence
  26. Compared to both free-market system and employer-based health insurance with potential discrimination against certain people and groups
  27. Compared to Oregon rationing as a zero-sum game
  28. Taken from Kaiser Family Foundation: Summary of New Health Reform Law
  29. This has prompted the government to consider cutting delivery to five days per week instead of six.
  30. Profit trends taken from Wikipedia entries on USPS, UPS, and FedEx.