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► New Report Shows More Employers Offering Healthcare

The percentage of private-sector employers offering group health coverage rebounded slightly in 2017 after a long gradual decline, according to an issue brief from the Employee Benefit Research Institute (EBRI).

After declining from 56.4% to 45.3% between 2008 and 2016, this percentage increased to 46.9% in 2017—the first overall increase since 2008, EBRI found, based on an analysis of the Medical Expenditure Panel Survey Insurance Component (MEPS-IC). While some previous years have seen offer rates rise in various specific firm size segments, this is the first overall increase since 2008.

“We found increases across all sizes of plans,” noted EBRI Director of Health Research Paul Fronstin in an August 23 statement. “Between 2014 and 2016, the percentage of the largest employers studied that offered health coverage increased from 92.5 percent to 96.3 percent, and we saw an increase from 21.7 percent to 23.5 percent for the smallest employers studied—those with fewer than 10 employees—between 2016 and 2017.”

Likewise, a growing number of workers are eligible for coverage through their employers, EBRI found. “While the overall offer rate for health insurance trended down until 2017, the percentage of workers eligible for health coverage has been increasing since 2015,” continued Fronstin. “Furthermore, the 76.8 percent of workers eligible for health coverage in 2017 was much higher than the percentage of employers offering such coverage,” he added. “The juxtaposition between the two trends suggests that workers have been migrating to jobs that offer health coverage.”

While the Affordable Care Act (ACA) requires employers with 50 or more employees to offer health coverage or pay a penalty, smaller employers are under no such obligation. The increase may be due to the strengthening economy, lower unemployment rates, and/or relatively low premium increases, EBRI suggested.

Specific Findings

EBRI’s findings in the report broke down by employer size as follows:

  • For employers with less than 10 employees, those offering health benefits increased from 21.7% to 23.5% between 2016 and 2017.
     
  • For employers with 10 to 24 employees, those offering health benefits increased from 48.9% to 49.4% between 2015 and 2016.
     
  • For employers with 25 to 99 employees, those offering health benefits increased from 73.5% to 74.6% between 2015 and 2016.
     
  • For employers with 100 to 999 employees, those offering health benefits increased from 92.5% to 96.3% between 2014 and 2016.


MEPS-IC, the source of the data, is an annual survey of private- and public-sector employers fielded by the U.S. Census Bureau for the Agency for Healthcare Research and Quality. More than 40,000 private-sector establishments were interviewed in 2017.

Small Employers

For small employers, the decline in offer rates over recent years could be attributed to several factors, EBRI observed, such as: rising health care costs and the fear thereof; availability of ACA exchange coverage; attitudes toward the ACA; the 2007–2009 recession; unemployment; and post-recession business and labor/employment softness and uncertainty.

By 2017, however, some circumstances may have changed, such as a lower rate of increase in health coverage premiums, and a lower unemployment rate necessitating new ways of recruiting and retaining workers.

Larger Employers

For mid-sized and larger-sized employers, the percentage offering health benefits has remained relatively steady, but some observers have predicted that even these employers may do less in the future, EBRI noted. And the nature of coverage does seem to have changed in many cases, with a shift from defined-benefit to defined contribution approaches and the emergence of wellness programs and private exchanges.

Things still could happen to shake larger employers’ commitment to health benefits, such as an economic downturn or implementation of the ACA Cadillac Tax. Nonetheless, “there are also reasons to expect employers to continue offering them,” EBRI stated. These include: concern about the effect of individual market volatility on employees; uncertainty about the future of the ACA exchanges; and, as with smaller companies, the need to attract and retain employees.

[11/2018]

 

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