Source: The National Institute for Health Care Reform

Decline in Employer-Sponsored Coverage

Reed Abelson at Economix points to a study showing a decline in employer-provided health insurance  due to the effects of the Great Recession. Between 2007 and 2010 the share of working-age adults with employer-provided health insurance dropped 10% from 63.6% to 56.5%. The key driving factor was the enormous loss of employment during the Great Recession, which started in December, 2007, and officially ended in June, 2009.  The proportion of unemployed adults under 65 spiked 10% from 21.6% to 31.6.% There was also a small shift from full time to part time and self employment – but the shift from high quality to low quality jobs accounts for only 3% of the total decline in employer-provided coverage.

The three groups disproportionately affected were:

  • Young adults: 
    • Percentage employed dropped from 70% in 2007 to 50% in 2010.
    • Percentage covered dropped from 43% ito 31%.
  • Families of adults with less than a high school education:
    • Percentage employed dropped 16% to just over 50%.
    • Percentage covered dropped from 47% to 36%.
  • Those employed in small firms:
    • Percentage employed dropped 51% to 45%.

Most Employers Remain Committed

However, according to management consulting firm Oliver Wyman’s new study, “Employer-Sponsored Healthcare: What Happens Now?,” an overwhelming majority employers want to keep providing health coverage no matter what.
They also ready for reform and express a strong appetite for change. The type of desired change depends on the type of company, but few are considering making “drastic” changes to their offerings.  Key findings are:
  • Only 8% of companies plan to drop employer-sponsored coverage. These are mostly smaller  manufacturing and retail companies with lower-paid employees for whom cost is a burden.
  • 92% would not drop coverage. Providing health care benefits to their employees is an important part of how they do business, partly because they report it’s the right thing to do, and parly to attract and retain happy, loyal workers.
  • 50%  anticipate having to make significant changes in order to maintain coverage.
  • 42% plan to continue the same coverage. They’re in relatively good financial health, so the cost of coverage is a secondary concern.

Employees Also Ready For Change

In addition to employers referenced above, the study also reached out to 738 employees.

  • 90% would be open to accepting “significant benefits changes” if they too could save money.

The PPACA represents the $2.6 trillion U.S. healthcare system’s biggest overhaul in nearly 50 years.  And even though 26 of the 50 U.S. states have challenged the law in court, the fact that change will happen seems certain. Fortunately, both employers and employees and seem receptive to the possibility of doing things differently.

The question for benefits professionals is how to respond to those changes. The study shows that employers are considering almost anything that’s on the table so long as it’s cheaper. Also, offerings provided by private exchanges and value-based networks will provide increased competition. It is urgent for coverage providers and brokers to respond quickly to changing products in a changing marketplace.

Snap! principle of doing business in an era of healthcare reform:

Insurers and brokers need to respond quickly to changing products in a changing marketplace.