Many companies that previously provided coverage to employees’ families,
regardless of the number of dependents, started charging an additional
premium to cover family members.66 Other companies adopted wellness
programs, designed to decrease healthcare costs by improving the health of
their employees.67 These programs, while commendable in their intent, fell
short of delivering proven benefits in terms both of health outcomes and
cost savings.68 In short, employers increasingly sought ways to get out from
under the burden they had taken on themselves and were increasingly
frustrated by their inability to do so.
During the years when EBHI was on the rise, employers were loath to
skimp on healthcare benefits for fear of losing valuable workers to a strong
labor market in which they could easily be lured away by a competitor with
a better health plan. Nowadays, with weakened labor power, an evolving
labor market,69 and the threat of global outsourcing, the positions are
reversed: employees are wary of asking for too much. With more workers
looking for a job, employers no longer need to offer the most lavish
benefits. If they continue to offer good healthcare coverage, it is most likely
because of inertial forces. The managerial class may be satisfied with the
status quo, for example, and employers may be reluctant to upset their
settled expectations. Perhaps not yet a complete anachronism, the
employment-based system for providing health insurance is on uncertain
ground. This brings us to the big question: In today’s world, do the benefits
of EBHI outweigh the costs? The next section addresses that question:
employer to offer a “defined contribution” plan, whereby the employer says how much it
will contribute for the employee in a given period and the employee must bear whatever
cost, and cost increase, goes beyond the employer’s contribution. AM. ACAD. OF ACTUARIES,
ISSUE BRIEF: UNDERSTANDING DEFINED CONTRIBUTION HEALTH PLANS (2002), http://
66. KAISER FAMILY FOUND., EMPLOYER HEALTH BENEFITS: 2014 SUMMARY OF FINDINGS
1 (2014) available at http://files.kff.org/attachment/ehbs-2014-abstract-summary-of-findings
(discussing how employers charge higher premiums for family coverage).
67. See SOEREN MATTKE ET AL., WORKPLACE WELLNESS PROGRAMS STUDY, RAND
HEALTH 1-2 (2013), available at http://www.dol.gov/ebsa/pdf/workplacewellnessstudyfinal
.pdf (discussing that employers have started wellness programs to combat chronic disease).
68. See Austin Frakt & Aaron E. Carroll, Do Workplace Wellness Programs Work?
Usually Not, N. Y. TIMES (Sept. 11, 2004), http://www.nytimes.com/2014/09/12/upshot/do-
workplace-wellness-programs-work-usually-not.html (explaining why workplace wellness
programs usually do not work); but see MATTKE ET AL., supra note 67, at xiii (explaining
that these programs have been found to impact employees’ “long-term health trajectory”).
69. In this evolving labor market, jobs have become less secure and careers more
volatile. The political scientist Jacob S. Hacker has famously termed this transformation
“The Great Risk Shift.” In such a constantly changing environment, companies are less
likely to make efforts and expenditures to tie employees to them for the long term. See
JACOB S. HACKER, THE GREAT RISK SHIFT: THE NEW ECONOMIC INSECURITY AND THE
DECLINE OF THE AMERICAN DREAM (2006).