Amid record job losses due to COVID-19, it has become clear that relying on employment for health insurance is a weakness of America’s health care system. Less obvious – yet even more pernicious – is the structural racism embedded in that employment-based insurance system. It’s time to reckon with and remedy deep inequities in how Americans get their health insurance.
Almost half of Americans (more than 150 million people) get health insurance through their job or that of a family member. Now, experts estimate that close to 27 million people will lose their health care coverage along with their (or a family member’s) job due to the pandemic.
These losses disproportionately affect people of color. Before COVID-19, people of color faced higher levels of unemployment and were more likely to be uninsured than whites. Unemployment has worsened during the pandemic, and the uninsurance rate for everyone is also likely to rise.
As difficult as it is to lose insurance when you lose your job, not everyone has equal access to employer-sponsored insurance (ESI) in the first place. Having to rely on a job for health insurance significantly disadvantages Black and brown people because they are less likely to be working in jobs that offer ESI benefits. Just 46 percent of Blacks and 41 percent of Hispanics have ESI compared with 66 percent of whites.
Making matters worse, workers who are deemed “essential” – including front-line workers who risk more exposure to the coronavirus – are disproportionately Black and Hispanic. These essential workers, including store clerks, food-service workers, and personal care attendants, are also less likely to have job-based insurance. Black and Hispanic workers are so “essential” that they must put their health at risk during the pandemic, but not “essential enough” to be protected with health insurance.
Compounding these racial disparities is that unlike salaries, the value of ESI benefits is not taxed. The result is a $260 billion tax subsidy for people who get ESI, which benefits middle- and upper-income people over lower-income workers and, therefore, whites more than people of color. According to a study by MIT Professor Jonathan Gruber, 24 percent of these tax subsidy dollars benefit the top 10 percent – the wealthiest – of Americans. This is 30 times the amount received by people in the bottom 10 percent of the income spectrum. It amounts to more of a subsidy than the entire bottom half of the income spectrum receives. Since Black and brown people tend to have lower incomes than whites, they are disproportionately disadvantaged by this regressive tax policy.
The net result of these policies is that a disproportionate number of working Black and brown people are uninsured. Without insurance, workers are just one injury – or COVID infection – away from financial devastation and even death.
While our system of health insurance coverage wasn’t necessarily designed with racist intentions, during this pandemic, we have a unique opportunity to reexamine the systems and social policies we have in place. When we see racist effects, however unintended, we must address this inherent unfairness.
To reduce racial inequity in access to health insurance benefits, employers can work to eliminate racial bias at the hiring level, particularly for jobs with health insurance benefits. Such a strategy would likely be good for business. Data shows diversity contributes to better financial performance and accounts for substantial economic growth overall.
Policymakers can also strengthen the alternatives to employer-sponsored insurance, including health insurance exchanges and available subsidies, which are inherently unbiased racially. Transparent, online insurance marketplaces are designed to offer the same benefits to all. Subsidies based on earned income are progressive rather than regressive like ESI tax benefits. Expanding access to subsidized insurance via marketplaces could be funded by redeploying the ESI tax subsidy.
And we, as American voters, can demand such approaches.
The twin tragedies of the coronavirus pandemic and the seemingly intractable systemic racism in our country have laid bare a key weakness in America’s health care system: the fact that we rely so heavily on employer-sponsored health insurance for our health coverage. We can fix the pandemic, but there’s no vaccine for the structural racism that has been built into the fabric of America over centuries. Undoing that legacy in health insurance will take time and deliberate action.
What are we waiting for? Now is the time.
Rosemarie Day is the founder and CEO of Day Health Strategies and author of “Marching Toward Coverage: How Women Can Lead the Fight for Universal Healthcare” Follow her on Twitter: @Rosemarie_Day1. Deborah Gordon is author of The Health Care Consumer’s Manifesto: How to Get the Most for Your Money and an Aspen Institute Health Innovators Fellow. Follow her on Twitter: @gordondeb.