Insurance companies offer health care plans. Companies negotiate group rates, and offer choices (often not more than one or two) to employees. The cost of the plan is deducted from the employee's paycheck.
Pre-ACA, if you didn't have a plan offered through your employer, you could buy one from the insurance company yourself. But what was available was unaffordable to nearly everyone. (I looked at one point because I wanted better coverage than what was on offer through my employer. It was a non-starter.)
When you change jobs, you can keep your insurance, but not for the same negotiated cost. In general, when you change jobs, you change insurance. If your new employer doesn't offer the same insurers as your old employer, that often means changing doctors.
The overhead on the system is massive. It also employs a lot of people.
At my old job, I had the fun task of "choosing" the policy for my company every year. I'd get quotes from multiple companies, create a spreadsheet that allowed apples to apples comparisons of approx. 30 plans, eliminate the obviously terrible options, go over the rest with a fine-toothed comb, narrow it down to the two or three best choices, summarize these for my boss, who had the final say...
...and she'd put off looking at the data until all the deadlines were passed and we had no choice but to go with the updated version of the crappy plan we were already on.
The next year, about a month out, she'd ask me to round up quotes again and the process would repeat.
Just one of the many, many reasons I'm no longer at that job.
A few numbers for the curious:
(keep in mind that this is only health insurance... vision and dental weren't covered, or even offered)
My data's a couple years out-of-date, so premiums will have gone up since them (they went up every year like clockwork), but here's a rundown of
approx. what was charged and who paid what.
Part of the idea behind employer-provided healthcare is that the employer can pay all or part of the premium, so it becomes part of your pay package. In theory, it can be a very nice perk. My current employer actually pays the bulk of the premium for all employees, and it's incredible. It's also, in my experience, vanishingly rare.
In reality, the employer chooses what portion they pay, and in shitty hands, it's a good way to say "yes, we offer health insurance to our employees," while the reality is so prohibitively expensive that many employees decline coverage, so the company doesn't have to pay a dime.
My previous, crappy employer paid 1/2 of the employee's premium, and $0 of any additional premiums if you wanted your spouse or children covered.
The plan we had actually wasn't too bad... not great, but then, ALL the options, even the most expensive, were crappy (High deductibles and insane prices for out-of-network coverage... whatever you do, don't get sick when you're out of town).
For our particular plan, the
monthly pricing was roughly this.
Employee Only: $450
Employee + Spouse: $900
Employee + Children*: $850
Employee + Spouse + Children*: $1,200
*Doesn't matter how many children, it's a flat rate.
So for an employee with no family, the company would pay $225/month, and take $103 out of every bi-weekly paycheck to cover the rest.
For our lowest-paid employees, making $8/hour, this was about 20% of their take-home pay, already more than they could afford, so most went without and used the same health plan that saw me through my 20s, crossed fingers, home remedies, and, very occasionally, leftover medicine from when your dog was sick. (Hey, antibiotic eye ointment is antibiotic eye ointment, amiright?)
If you had a spouse and kids, well, the company would still only pay $225/month. The employee would then have approx. $450 deducted from every... single... paycheck. For the folks making $8/hour, this would have left them with approximately $75/paycheck to actually take home.
Every single one of them was told upon hiring, "oh yes, we offer health insurance to all our employees after three months of employment."
(Oh yeah... can't forget the grace period, which is standard procedure even at the good companies. Don't have existing coverage when you're first hired? Better hope you can make it to the deadline in one piece).