Employer-sponsored insurance (ESI) has long been the most common source of health coverage in the United States and provides flexible, high-quality coverage for workers at a better value for taxpayers and the federal government than public alternatives. In 2021, 58 percent of all non-elderly Americans received health insurance through their employer, though in 2000, this number was nearly 70 percent.

Event Summary 

Key topics: 

• Downsides of decoupling insurance from employment: 
  • The value of the employer health coverage tax exclusion would be lost. 
  • It would reduce incentives to work. 
  • Employer-based insurance pools people together in a health plan for reasons other than health, which ensures diversity in the pool that spreads costs. 

• Reasons for ESI’s popularity: 
  • Allows for individuals to pass complex decisions to a larger entity they trust. 
  • Employers can get better deals than individuals can. 
  • Employees like the benefits in their employer-sponsored plans. 
  • ESI plans can more quickly adapt (e.g., expanded telehealth coverage during the COVID-19 pandemic) than bureaucratic government plans. 

• Opportunities for reform: 
  • Finding other ways to mimic how ESI plans work for those who fall outside the ESI system (e.g., contract workers). 
  • Creating more flexibility in benefits for employees and thus greater control over total compensation. 
  • Porting technological innovations, such as ensuring care compliance, between the prescription drug side of plans to the hospital and provider side. 

Learn more about Employer-Sponsored Health Insurance:

• The Value of Employer-Sponsored Health Insurance: A Summary
• Primer: Employer-Sponsored Insurance
• Infographic: The Social Value of Employer-Sponsored Health Insurance
• How the Liberal Health Care Agenda Undermines Employer-Based Health Coverage