In the United States, it is estimated that close to 100 million citizens receive their healthcare insurance through their employers; this is a program referred to as Employer-Sponsored Healthcare. Based on the implications and benefits from this healthcare strategy, it suffices to conclude that employers should be responsible for providing healthcare insurance to their employees, as well as their families.
Purchasing insurance for the workers by their employer has significant benefits to the last one. It has economic advantages, as this tends to reduce administrative costs. When employees are registered as a group, the cost of administration is reduced as opposed to individual registration where a person has to bear all the costs. The problem of adverse risk selection is also reduced through the employer-sponsored healthcare insurance since most employer-sponsored groups are stable: they are formed for reasons of purchasing the cover.
On the other hand, individual policies tend to be higher due to the high rate of risk selection. Another reason is that these insurance policies help the employee enjoy costs reduction because the employer is exempted from state and federal social security and income security payroll taxes. This advantage enables the employees to save their money for household and other basic needs. Individual insurance polices deduct social security from the payroll of individual, hence increasing their cost of healthcare insurance.
Employer-sponsored healthcare insurance is also convenient as it saves the employees’ time since the employees automatically make the deductions from their payrolls. Therefore, they are not involved in the process of sending or remitting the premium on monthly basis.
More importantly, one cannot evade the question of innovation that goes hand in hand with employer-sponsored healthcare in terms of the delivery system that is evident only in the U.S. It has developed a way to the redistribution of care to cover the costs for patients residing both within and outside the health centers.
This healthcare program has led to the adoption of high quality models that take care of both funding and release of healthcare services to the employees, as well as their families. Kaiser Permanente is an excellent illustration of these models. Another advantage of the employer-sponsored healthcare is the establishment of more complex techniques of meeting the healthcare needs of the employees from all the angles. For instance, successive innovations have seen the dawn of bone-marrow transplant measures.
On the other hand, individual insurance is much expensive in terms of premiums, thus it is a disadvantage to the employee. Furthermore, it takes the individual a lot of time to remit the monthly premiums. The cost of administration of the premium is also high resulting in high premium. In addition, individual insurance premiums are taxed on a regression tax policy.
Those individuals with high income are subjected to high marginal tax rates because of the expensive policies they hold. Therefore, considering these drawbacks, an employer within or outside the U.S. concerned about the needs of his/her workers will definitely offer the employer-sponsored healthcare insurance to his/her employees.