focusing for the most part on the contributions of EBHI in the pre-ACA
world. How the ACA changes things and might affect this analysis will be
dealt with in Section III.
II. PROS AND CONS OF THE EMPLOYMENT-BASED SYSTEM
While many, including the authors, believe that EBHI is not the best
foundation for our nation’s healthcare system, it has served a valuable
function throughout much of the twentieth century and, even in today’s
changed and changing world, it may still make sense to continue its use in
selected applications.70 A key point to remember is that in designing a
system for the U.S., we are not starting with a clean sheet of paper. What
we have in place now, and the commitment of people and institutions to
maintaining the status quo, are powerful determinants of what we can hope
to achieve as we seek the ideal solution.
Key hallmarks of an employment-based system, at least as it has evolved
in our country, are diversity, complexity, and cost. Almost by definition, an
employment-based system is decentralized, depending on many employers
to negotiate with many insurers, who in turn must negotiate with many
hospitals, physicians, and other providers of healthcare goods and
services.71 The result is a myriad of insurance products, prices, and
relationships that in its diversity and complexity goes well beyond what
exists anywhere else in the world.72 It is uniquely “American.” The case
against EBHI is not open-and-shut, however; and, even if it were clear-cut
in substantive terms, it would still be a daunting challenge to change settled
thinking and move toward new structures and arrangements. Just as large
ships can’t turn in their own length, decentralized social systems don’t
change overnight, or even in a decade.
70. This is the view of David Hyman and Mark Hall, whose excellent article, Two
Cheers for Employment-Based Health Insurance, supra note 16, was an important guide
through this analysis.
71. See Uwe. E. Reinhardt, Employment-Based Health Insurance: A Balance Sheet, 18
HEALTH AFF. 124, 126 (1999), available at https://www3.nd.edu/~wevans1/class_papers/
reinhardt_employer_health_insurance _health_affairs.pdf (explaining the decentralization of
the employment-based system). Note that one can posit a national healthcare system that
relies heavily on employer initiatives, actions and financing and yet is much more tightly
constrained in its structure and operation than ours is. Germany, Argentina and Japan offer
good examples. See generally T. R. REID, THE HEALING OF AMERICA: A GLOBAL QUEST FOR
BETTER, CHEAPER, AND FAIRER HEALTH CARE (2010).
72. See U.S. DEP’T OF LABOR, Report of the Working Group on Challenges to the
Employment-Based Healthcare System (Nov. 14, 2001), http://www.dol.gov/ebsa/
publications/ AC_1114b01_report.html (“[ A] large employer can wield clout in the market
place by virtue of the sheer number of employees and hence the dollars it brings to the
insurer . . . . Employers can demand things from the insurer that individual buyers could
not.”).
