Why America’s Healthcare System Doesn’t Work In Today’s Economy

The California judge’s rejection of Prop 22 brings forth a very important business issue facing all companies — company-sponsored healthcare. The U.S. relies far too heavily on employers to provide healthcare coverage and, in today’s world, we don’t have a way to make healthcare coverage portable from one company to another.

People shouldn’t lose medical insurance if they leave or lose their job. Company-sponsored healthcare prevents many individuals from getting initial employment due to the company’s cost “burden” of supporting a new employee, and it prevents many more individuals from improving their station in life by seeking better employment with a new company. Further, company-sponsored healthcare disadvantages women in the workforce (and women re-entering the workforce) as well as lower-income people that are out of work and trying to break in or move up. Lastly, our society’s reliance upon companies for healthcare benefits limits companies’ ability to offer much more flexible work arrangements and hours that would naturally accrue to the benefit of men and women with small children at home who need schedule flexibility to care for the next generation. Flexible work hours and fundamental changes to our work policies would help put far more women and homemakers to work, thus accelerating our economic growth with this talented, underutilized available labor pool.

Strangely, you can easily transfer your 401k from company to company, but you can’t transfer your healthcare benefits. Every time you leave a job for any reason, you face the additional uncertainty of no healthcare coverage. COBRA doesn’t address this problem because it is too expensive — most can’t afford it. Similarly, the higher-deductible Obamacare plans aren’t affordable either, but largely because the deductibles are so high and the plans provide little practical benefit. Thus, COBRA and Obamacare do not address the core problem of lack of portability of healthcare coverage, and employees remain at very high risk whenever they incur a job change.

We need portable healthcare. The primary way to accomplish this is to offer coverage options that are independent from employers. The U.S. needs to quickly adopt new forms of portable healthcare coverage that offer stability for employees at work and during job transitions. Portable healthcare is a central ingredient to building solid employee well-being, tapping into the underutilized talent pool in our society, and driving exceptional economic growth.

Work life is undergoing seismic changes. Let’s take this opportunity to improve it for the better.