Despite predictions to the contrary, employers did not drop health benefits en masse after the Affordable Care Act came into effect, the Employee Benefit Research Institute found.
The EBRI published a study concluding that the percentage of private sector employers offering health benefits has increased. In 2016, 45.3% of private sector employers offered health benefits. In 2020, the percentage of private sector employers providing health services reached 51.1%.
“A struggling employer health care system continues to hold its own: what could change that?” Also finds that 80.5% of workers employed by private sector employers were eligible for health benefits, up from 75.4% in 2014, continuing a five-year trend.
Despite this increase in the number of employers offering health benefits, the employment-based health benefits system is still under threat, according to the EBRI report. A combination of a recession, higher unemployment, the Biden healthcare plan and the availability of healthcare reimbursement schemes that workers can use to purchase healthcare benefits in the non-collective market could test the resilience of the employment-based health delivery system.
The study also provides information on the differences in the availability of health coverage between small and large employers and on changes in employment trends that may contribute to the increase in eligibility.
The data cited in the study come from the Medical Expenditure Panel Survey – Insurance Component, and show
- Since 2013, the percentage of employers with 1,000 or more employees providing worker health benefits has consistently been near or above 99%.
- However, smaller establishments have shown a steady decline in supply rates. For the smallest employers studied, those with less than 10 employees, the supply rate fell from 28% in 2013 to 22.3% in 2020.
- In 2017, the overall percentage of private sector employers providing health benefits increased for the first time in nearly a decade. In 2008, 56.4% of private sector employers provided health benefits. In 2016, it had fallen to 45.3%. It then rose to 51.1% in 2020.
- The percentage of workers eligible for health coverage through their work also continued its upward trend. Between 2014 and 2020, the percentage of workers eligible for health coverage increased from 75.4% to 80.5%. This increase is likely attributable to changes in the composition of the workforce. The EBRI has seen a shift towards full-time employment, more workers employed in companies with unionized employees, fewer workers considered low-paid and a shift to larger companies.
The finding that in 2020 the percentage of private sector employers offering coverage and the percentage of workers eligible for such coverage increased may be surprising given the impact the COVID-19 pandemic has had on the country. economy and labor market, said EBRI. It is important to note several factors that would explain the results for 2020.
First, an employer’s decision to offer health benefits in 2020 was made in 2019, before the COVID-19 pandemic. The low unemployment rates at the time were perhaps a major factor influencing whether an employer would continue to provide health benefits. Second, when the COVID-19 pandemic hit the United States, many employers chose to put workers on leave. This led to a sharp increase in the unemployment rate, but many of these workers were able to maintain their health benefits. Third, the 2020 results can be influenced by when in 2020 an employer responded to the survey. Fourth, the results may also suffer from selection bias. Companies that have closed their doors due to the COVID-19 pandemic, forcing their workers to lose their health benefits, may not have responded to the survey.
Why might more workers be eligible for health coverage?
The EBRI found that the percentage of workers eligible for health benefits continued a long-term trend. While increasing supply rates is one of the reasons more workers are eligible for coverage, EBRI has also found that workers have migrated to jobs that are more likely to offer coverage. health.
A long-term transition to full-time employment, a decrease in the number of workers considered low-paid, and a shorter-term transition to larger companies were among the trends found by the EBRI. The percentage of employers reporting that 75% or more of their workers were employed full-time rose from 63% to 70% between 2014 and 2020. Likewise, the percentage of workers in companies where low-paid workers represent the highest level of employment. minus 50% of the labor force increased from 29% in 2013 to 19% in 2020. And, more recently, the percentage of workers employed in large establishments (those with 1,000 or more employees) increased from 46% to 51 % between 2016 and 2020.
Full-time workers are more likely than part-time workers to receive health benefits. Likewise, large companies are more likely than small companies to offer health benefits. These and other changes are not significant, but they are significant enough to result in an increase in the percentage of workers eligible for health benefits in the course of their work.
The potential impact of the Biden healthcare plan
During the campaign leading up to the 2020 presidential election, President Biden proposed policy changes that would prompt workers to move away from employment-based health coverage for ACA exchange coverage or for employers to stop offering traditional employment-based health benefits. Biden’s health care plan includes three provisions that would make it easier for workers and employers to move away from employment-based health coverage:
- Increase grants to ACA premiums and expand grant eligibility.
- A “public option” health plan.
- A “buy-in” Medicare program for 60-64 year olds.
A publicly available health plan would give ACA exchange registrants a potentially less expensive new health plan option. To the extent that these plans are able to successfully negotiate lower supplier reimbursement rates, the premiums would be lower. The EBRI said this would put pressure on private health plans offering coverage through swaps to also find ways to lower premiums in order to remain competitive.
The EBRI study concluded that if the public option succeeds in reducing premiums while maintaining the generosity of coverage, employers may find it more attractive to remove coverage so that their employees can only obtain coverage through through exchanges. Additionally, even though employers have not abandoned coverage, workers may find the lower premium plan, combined with more generous grants, to be more attractive than their employment-based coverage options.
While there are many reasons to expect employers to move away from offering health benefits, there are also reasons to expect employers to continue to provide them, said EBRI.
Large employers may continue to sponsor their own health insurance plans due to concerns that employees and their dependents may be affected by the continued volatility of choices and premiums in the out-of-group market. Employers may also be reluctant to walk away from the coverage offering due to uncertainty about the future of ACA and what that might mean for the availability of non-group coverage. Employers may continue to provide benefits because they need healthy employees and may think they can do a better job of investing in workers’ health than the non-group market or government.
Finally, employers may be reluctant to forgo providing health coverage simply because of the strength of the economy and falling unemployment rates, making it difficult to remove such a benefit in an environment where it is difficult. recruit and retain workers.
Susan Rupe is Editor-in-Chief for InsuranceNewsNet. She previously served as director of communications for an association of insurance agents and was an award-winning journalist and newspaper editor. Contact her at [email protected]. Follow her on Twitter @INNsusan.
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