The Unique Role of Employer-Sponsored Health Insurance in the US

Employer-sponsored health insurance plays a prominent role in the United States, with nearly half of the population relying on it. This system emerged during World War II due to wage controls and labor shortages, and the tax exemption of these benefits solidified its prevalence. However, employer-sponsored insurance has several flaws. One major issue is job lock, where individuals feel trapped in their jobs because changing employers may mean losing their health insurance. This problem particularly affects low-paid and working-class individuals. Additionally, employer-sponsored insurance is inequitable, benefiting high-income workers more than low-income workers, and it often leads to excessive healthcare spending. Despite some efforts to mitigate these issues, such as the COBRA program, the system remains flawed, and alternatives like universal catastrophic coverage are being considered to address these challenges.