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Employee-Based Health Care: Adequate Coverage?

    Employer-based health insurance is often the goal for uninsured Americans. The cost of health care is astronomical; so much that many individuals choose to go to a hospital emergency room for their health care needs in order to be billed for the services. The bill rarely gets paid. Employers offer a wide range of health insurance plans, the best and most comprehensive provided for those people who work for some branch of the government. In the private sector, health insurance ranges from fee-for-service, health management organizations (HMO), or Preferred Provider Organizations (PPO).  Some employers offer their employees a choice in which type of insurance they prefer (the costs to the employee include a deduction from their paycheck, deductibles and co-payments at time of service). Other, smaller companies are affiliated with one plan only.

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Regardless of the fees involved, research supports that most employees feel that their health insurance provides more than adequate coverage.

History of Employer Health Coverage

    The basis for employer based health insurance is that a large number of employees equally distribute the risk (of needing healthcare). Instead of large fees for frequently ill employees and small fees for healthy employees, everyone pays the same amount, everyone shares the risk. Employers began to offer health coverage during World War II. This was a time where they needed to attract employers and limit their tax liability. The fringe benefit that best attracted new employees was having their health coverage paid. The benefit to the employer is that providing health coverage is a large tax deduction.  Soon, the National Labor Relations Board became involved and argued that any company not willing to bargain for health coverage should face sanctions.

Is the Coverage Adequate?

    In order to determine if employer based health insurance offers adequate coverage, one must ask the employees who are covered. A 2005 survey by the Employee Benefit Research Institute (EBRI) found that most Americans are satisfied with their coverage and that they don’t link quality to cost. In other words, most Americans believe that the quality of health insurance is not dependent on the cost, and that the cost does not influence the quality. Today, employees can be offered one or all of the following types of coverage:

            Indemnity coverage offers the most flexibility in choice of doctors. Plan members pay a monthly fee and must satisfy a deductible. In return, they can choose their own doctors and do not have to wait for referrals in order to get service. According to the Office of Personnel Management (OPM), eighty-two percent of indemnity enrollees were satisfied with the quality of their health coverage. HMO’s offer less expensive coverage and less out of pocket fees to the insured, but has less flexibility in terms of choosing a physician and receiving care without referrals. Only forty-five percent of customers were “very satisfied” with the quality of coverage. PPO coverage is similar to that of the HMO, but with slightly higher out of pocket expenses and more flexibility in choosing doctors. Sixty-seven percent of those covered were “very satisfied” with the quality of coverage.  In a POS (point of sale) plan, the insured can find their own physician who must agree to being billed under this plan. This physician is the starting point for all referrals (there was no numerical data on POS satisfaction).

    As of 2002, the largest number of covered individuals were under a PPO plan, and the fewest were covered by indemnity.

Who’s Whining?

    Not all employees are completely satisfied with their health care coverage, and Consumer Affairs has plenty to say on that subject.  Customers under Aetna’s HMO plan were frequently dissatisfied with the mismanagement of co-payments and rejection of coverage for procedures due to misplaced or improperly completed paperwork. Dana (last name withheld by publisher) of Albertville, Alabama was turned down for coverage that involved experimental treatments.

    Kaiser Permanent’s HMO plan is often seen as a boon: besides co-payments for office visits, there are very few out of pocket expenses. It seems that some customers are paying the price. Gerardo of Long Beach, California recalled that his wife entered a Kaiser-approved psychiatric facility for treatment of depression voluntarily. In order to receive inpatient coverage, however, her status was changed to “involuntary” and needed a psychiatrist’s approval in order to leave.

    The biggest complaint about Blue Cross and CIGNA health care is the access to care. According to US News, patients felt that it was difficult to get in to see their doctors due to the red tape of getting their visits approved or having so few doctors from which to choose that the waiting time for an appointment exceeded the time in which they could reasonably get treated.

What Factors Make the Coverage Adequate?

    Patients have different needs in regard to their health insurance coverage, but there are some issues that apply to everyone, regardless of age, race, sex or current health status. The first is the insurance company’s willingness to inform patients and cover them for important cancer pre-screenings. According to the American Association of Health Plans, all HMOs remind their customers about screenings for colorectal, prostate and cervical cancers (where it applies by sex), and all cover the screenings for colorectal and cervical cancer screenings. Ninety-one percent of HMOs cover screenings for prostate cancer. Between ninety-one and ninety-eight percent of HMOs will cover any procedures (colonoscopy, barium enema, etc) needed to screen for cancer, and ninety percent will cover a mammogram.

    Overall, customers are satisfied with the quality of their employee-based health coverage. They agree that coverage is more than adequate and covers all of their basic needs. The concern for the future is the cost:  costs are rising and are being passed down to the consumer. Some are finding that they need to take better care of themselves in order to avoid seeing a doctor. In the end, isn’t that what it’s all about?


Custer, W (1999).Why We Should Keep The Employment Based Health Insurance System. Health Affairs. 115-123.

Fronstin, Paul (2005 Oct 18). 2005 Health Confidence Survey. Retrieved October 21, 2006, from EBRI Web site:

Gabel, J (2003).Job-Based Health Insurance. Health Affairs. 18, 62-74.

(2003 Nov 10). Fee For Service Health Coverage. Retrieved October 21, 2006, from

Kiplinger’s Personal Finance Web site:

Maloney, MaryAnn (2003 Oct 10). Customer Satisfaction Survey Results Revealed. Retrieved October 21, 2006, from Office of Personnel Management (OPM) Web site:

(2006). Consumer Complaints About Health Insurance. Retrieved October 21, 2006, from Consumer Web site:

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