The Core Argument for Decoupling
America ties health insurance to employment. Most experts agree this is a problem. However, few speak about it as directly as Sharon Williams does.
Williams is a management consultant. She also served as president of the University of Michigan Health Plan during its wind-down. At the Becker’s Spring 2026 Payer Issues Roundtable in Chicago, she made her position clear.
“We will not be able to appropriately address cost until we uncouple healthcare from employment,” she said.
Her argument centers on risk pool fragmentation. ACA risk pools shift constantly as people move in and out of coverage. Changes in employment status make this worse. A broader, more stable risk pool could reduce volatility and bring costs under control. Moreover, Williams clarified she does not support a single-payer model.
“That’s absolutely ridiculous because this country doesn’t have the infrastructure,” she said. “But we do have a way to provide cradle-to-grave coverage.”
How Employer-Sponsored Insurance Drives Inequality
The $27,000 Problem
Yale University associate professor Zack Cooper, PhD, studies health economics. He points to a striking figure. Employer-sponsored family health insurance costs roughly $27,000 per year.
“You’ve got families buying a new car’s worth of health insurance every year,” Cooper said.
Beyond the sticker shock, the structure of employer-sponsored insurance hits lower-wage workers hardest. Premiums stay flat across a company. Wages do not. Therefore, a mailroom worker pays the same premium as the CEO — yet that cost takes a far larger bite out of their paycheck.
Job Losses Hit the Lowest Earners
Cooper’s research shows a direct link between rising healthcare costs and job cuts among lower-income employees. When premiums rise, employers often shed workers. Those workers are rarely executives.
“When healthcare spending goes up, the job losses we see are concentrated among lower-income workers,” Cooper said.
Furthermore, he identifies employer-sponsored insurance as a leading driver of income inequality in the United States. Wages vary widely inside companies. Premiums do not. This asymmetry quietly widens the income gap year after year.
The Historical Accident Behind the System
A World War II Legacy
Cooper calls the rise of employer-sponsored insurance “a historical accident.” A World War II-era wage freeze made employers turn to health benefits as a recruitment tool. Then, in the 1950s, Congress excluded employer health contributions from taxation. No one designed this system intentionally. Yet it became the backbone of American health coverage.
“Nobody would design it this way,” Cooper said. “It’s the largest exclusion in the tax code, and it creates all these distortions.”
Why the Pressure Is Building Now
The Gig Economy Shift
Williams argues that more workers now actively choose non-traditional employment. They prefer flexibility over a 9-to-5 job with benefits. As a result, employer-sponsored coverage reaches fewer people who want it.
“You have a number of people who want to work the gig economy,” she said. “They don’t want the nine-to-five job with insurance.”
Cooper agrees the gig economy’s growth will push more workers toward ACA exchanges. However, some major insurers are pulling back from ACA products — creating a tension that policymakers must address.
“If you’re making money through the gig economy, you pay taxes on that money and buy health insurance,” Cooper said. “The question is: Who do we subsidize and how?”
Additionally, a December 2025 Talker Research survey on behalf of Oscar Health found that health insurance ranks as a top factor when Americans consider a career move. This shows the issue cuts across income levels and industries.
What Decoupling Could Actually Look Like
Policy Options on the Table
Cooper outlines several practical paths forward. First, policymakers could roll back the tax exclusion for employer-sponsored coverage. Second, employers could give workers tax-free dollars to buy insurance independently. Third, lawmakers could expand ACA subsidies to cover more people in the individual market.
The ACA’s “Cadillac tax” was one attempt to address the tax exclusion. Congress ultimately repealed it. However, the debate it sparked remains relevant today.
The Marketplace Problem
Williams raises a critical concern. Even with more money in people’s hands, the current healthcare marketplace is too complex for individuals to navigate alone.
“You can’t just give people money and tell them to go out and buy healthcare in this current system,” she said.
Cooper also notes that provider market consolidation drives premium increases. Insurers alone cannot solve the cost crisis. Addressing the underlying cost of care is equally essential.
Over the medium term, Cooper expects more consumers to enter the individual market. Greater price sensitivity could push insurers toward lower-premium, narrower-network products — and ultimately force more innovation.
The Role of AI in This Shift
Accelerating Unemployment Pressure
Williams believes AI will speed up unemployment. If that happens, more workers will lose employer-sponsored coverage. This, she argues, makes decoupling even more urgent.
Cooper is more cautious. A March 2026 Anthropic report found no systematic rise in unemployment among workers with high AI exposure since late 2022. Still, the report acknowledged that some occupations face greater risk as AI takes on more tasks.
The full impact of AI on employment — and on health coverage — remains uncertain. Nevertheless, its disruptive potential adds fresh urgency to the decoupling debate.
A Moment of Reform
Cooper sees a broader historical pattern at work. Major healthcare reform in the United States tends to happen every 10 to 20 years. He believes another wave is approaching.
“Every 10 to 20 years, you get big healthcare reform in the U.S.,” he said. “We’re starting to age up to that right now.”
Whether AI, the gig economy, or rising premiums finally tips the scales, the pressure to rethink health coverage’s link to employment is stronger than ever. The next reform era may already be underway.
