Report: Fewer Employees Getting Health Insurance Through Work

The number of workers insured by their employer has suffered a steady decline during the last decade, according to a new report published yesterday.

The report from the Robert Wood Johnson Foundation found the percentage of non-elderly Americans receiving coverage via their employer fell from nearly 70 percent in 1999-2000 to just under 60 percent in 2010-2011, a drop of roughly 10 percent.

Those national averages vary quite a bit state by state, however. The report’s map of the U.S. shows Alaska, Montana and Wyoming at the bottom for employee-sponsored insurance , while Hawaii, which has has an employer insurance mandate since 1974, leads the nation with 84.1 percent of its employers offering insurance.

Critics of the Affordable Care Act have long argued that the reforms would result in a wave of employers dropping their coverage plans. The report shows that the national decline in employer insurance coverage began long before the ACA was even conceived.

Some of the report’s findings won’t surprise.  U.S. employees pay a lot more than they did a decade earlier for health insurance while employee contributions to  insurance premiums have more than doubled, from an average of $435 to $1,056 for single coverage, or from $1,526 to $3,842 for families, the report found.

“Employers continue to shoulder about the same percentage of costs for employees’ health insurance as they did 10 years ago, but everyone’s costs have increased dramatically,” said Risa Lavizzo-Mourey, president and CEO of the Robert Wood Johnson Foundation, in a statement.

And lower-income Americans have been hit hardest over the past decade. The percentage of people covered by employer-sponsored insurance fell less than 3 percent for those making 400 percent or more of the federal poverty level, while those making 200 percent or less of the poverty level saw employer coverage drop by about 10 percent.

What’s behind the dip in employer-sponsored insurance?

Many factors contributed to the general decline in ESI (employer-sponsored insurance) coverage across the country and at the state level: decreases in overall employment levels along with decreases in the percentage of employers offering ESI (from 58.9% to 52.4%); decreases in the percentage of workers employed at establishments offering coverage (from 89.3% to 85.9%); decreases in the percentage of eligible employees taking up employer coverage offers (from 81.8% to 76.3%); and decreases in the number of individuals enrolled in ESI as dependents (from 35.4% to 30.6%).

While the trend line here are clear, the actual decrease in the percentage of employers offering insurance is actually a bit more modest than the report initially suggests – from 58.9 to 52.4 percent.

While this welter of statistics might seem a bit wonkish, the fate of employer-based health coverage – and how the Affordable Care Act will impact it – is  a central question in health policy circles these days. Critics of Obamacare have argued that the new law will lead cost-conscious employers to rely more on part-time employees or drop their coverage plans altogether and opt to pay the comparatively minor fine for doing so.

Kelly Kennedy, writing in USA Today, offers a quick summary of predictions on how the new law will impact employers and their workers:

The Congressional Budget Office says between 3 million and 5 million fewer people will have employer-subsidized insurance. A Towers Watson survey of more than 500 companies with more than 1,000 employees found none of the companies plan to drop insurance because of the law. A House Ways and Means Committee study found that 71 Fortune 100 companies said they could save $28.6 billion by dropping health insurance and paying the $2,000-per-employee fine.

Despite the ongoing declines in employer coverage, the RWJF report still says employer-sponsored coverage “is expected to remain the primary avenue by which nonelderly Americans obtain coverage.”

The Affordable Care Act aims to reverse these trends by offering subsidies for people to buy insurance on their own through state health insurance exchanges.  Whether those subsidies will be enough to enable lower-income individuals to buy insurance will be one of the central questions health reporters will investigate over the next year.

“Higher costs naturally translate into fewer employers offering insurance coverage, and fewer employees accepting it, even when it is offered,” Lavizzo-Mourey said. “That is why it is so important that people have options for purchasing affordable health insurance that meets their needs.”

Photo by USACE HQ via Flickr.