This link between insurance and innovation isn’t relevant merely for the obvious reason that Congress is in the late stages of debating health reform. It is also relevant because the United States is suffering from an innovation deficit. Even before the financial crisis, the decade that will end later this month was on pace to have the slowest economic growth of any since before World War II. The No. 1 reason, I’d argue, was our innovation deficit.
Only 46% of companies with three to nine employees offer health insurance, down from 56 percent a decade ago, according to the Kaiser Family Foundation. Why? The administrative costs of insurance are high when they aren’t spread over a large group of workers. Insurers also know that the individuals and small companies who sign up for health plans tend to be the ones with the most medical problems, pushing premiums for such plans even higher. So unless the government steps in to create a large pool of workers who can then buy insurance more cheaply, many small companies will go without it — and some workers will find themselves tethered to the safety of a big company.
If Health Care Reform Fails, America’s Innovation Gap Will Grow – http://www.nytimes.com/2009/12/16/business/economy/16leonhardt.html?_r=1&ref=politics
The United States spent 16 percent of its GDP in 2007 on health care, higher than any other developed nation. The nonpartisan Congressional Budget Office (CBO) estimates that number will rise to 25 percent by 2025 without changes to federal law (PDF). Employer-funded coverage is the structural mainstay of the U.S. health insurance system. According the U.S. Bureau of Labor Statistics, about 71 percent of private employees in the United States had access to employer-sponsored health plans in 2006. A November 2008 Kaiser Foundation report notes that access to employer-sponsored health insurance has been on the decline (PDF) among low-income workers, and health premiums for workers have risen 114 percent in the last decade. Small businesses are less likely than large employers to be able to provide health insurance as a benefit. At 12 percent, health care is the most expensive benefit paid by U.S. employers, according to the U.S. Chamber of Commerce.
Healthcare Costs and U.S. Competitiveness – http://www.cfr.org/publication/13325/
According to data from the Bureau of Labor Statistics National Compensation Survey (NCS), in March 2006, 71 percent of private industry workers had access to employer-sponsored medical care plans and 52 percent participated in such plans. In the NCS, employees are described as having access to a benefit plan if it is available to them for their use. Employees are considered as participating in contributory plans if they have paid the required contributions and fulfilled any requisite service requirements. Employees in noncontributory plans are described as participating whether or not they have fulfilled any applicable service requirements. The term “take-up rate” refers to an estimate of the percentage of workers with access to a benefit plan who participate in the plan. The term “incidence” can refer to either rates of access to or rates of participation in a benefit plan. Most employees place a high value on benefits, especially benefits such as medical, life, and disability insurance. Firms employing large number of employees generally can negotiate lower group insurance rates and better coverage than individual employees are able to negotiate in the open market
The Likelihood of Having Employer-Sponsored Health Insurance – http://www.bls.gov/opub/cwc/cm20071128ar01p1.htm
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