To make the many accomplishments of modern medicine available to Americans such as Beth Ridge, the United States depends heavily on a voluntary system of employment-based health benefits. Although neither federal nor state law generally requires employers to finance health coverage for employees and their families, almost two-thirds of all Americans under age 65 receive health benefits through the workplace.

Sixty years ago, when the full capacity of modern medicine was just beginning to be mobilized, such benefits barely existed. Indeed, few had access at that time to health insurance from any private or public source. Since World War II, most American workers and their families have come to rely on health insurance provided through the workplace. Recent trends in the general economy and in the health sector have, however, generated considerable uncertainty about the continued availability of such coverage. An individual's probability of losing health benefits, being trapped in a job or on welfare because a new job comes without health coverage, or facing disruptions in established relationships with physicians is growing. Many employees and employers are increasingly concerned—even fearful—about their inability and the inability of governments, insurers, and medical professionals to deal effectively with problems related to the availability, cost, and quality of health benefits and health care.

The United States is unique among advanced industrialized nations in the way it relies on employers to voluntarily sponsor and finance health benefits for workers and their families. In this system, not only are employers free to offer or not offer coverage, most have extensive discretion in determining what specific benefits are to be offered, how they are to be administered, whether employees must participate, what share of the cost employees must pay, and what will be done to control costs. As a consequence, American workers have particular reason to factor the availability and quality of workplace health benefits into employment decisions, collective bargaining, and other interactions with employers.

An understanding of the link between employment and health benefits and the relationship between private and public spheres of decisionmaking about health care delivery and financing is essential to an informed debate about restructuring the nation's health care financing and delivery system. Such an understanding, in turn, requires an appreciation of the social, economic, and political dynamics that created employment-based health insurance and the advantages and disadvantages that accrue to its sponsors and participants and the society as a whole. This report is intended to help build this necessary understanding by

  • describing employment-based health benefits and their relationship to the overall structure of health care financing and delivery in this country;

  • identifying the important features, strengths, and limitations of this system;



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