Rate of employer-based health insurance keeps dropping

Kelly Kennedy, USA TODAY | USATODAY

WASHINGTON — The availability of employer-sponsored insurance has fallen by about 10% over the past decade, which has spurred an increase in the overall number of Americans without health insurance, according to a report released today.

"This documents that in virtually every state across the country, there has been a steady decline in employers that provide coverage over the past 10 years," said Andrew Hyman, director of the Robert Wood Johnson Foundation's health care coverage team. "It would be a real stretch to say this was caused by anticipation of the Affordable Care Act," President Obama's 2010 health care law.

The universal coverage requirement and the state health insurance exchanges needed to make it work will start Jan. 1. Some employers have said they may drop health insurance because it would be cheaper to pay a $2,000 fine and have employees buy insurance through the exchanges instead of paying an average of $15,000 to buy that employee health insurance.

Other employers have said they will drop employees' hours below 30 a week to avoid the requirement to provide insurance or pay a fee.

If so, employers would be following a trend that started before the health care law passed in 2010. The new study found that employer-sponsored coverage dropped from 69% to 60% between 1999 and 2010. The amount each employee paid annually for insurance more than doubled in that period from $435 to $1,056 for an individual and from $1,526 to $3,842 for a family.

The Johnson foundation's State Health Access Data Assistance Center conducted the research.

Coverage also varied from state to state, based on state law, regional employment rates and average employer size.

Hyman said the steady decline in coverage has come in spite of changes in the economy and employment rates throughout the decade.

"So now we're all wondering how it will change with the implementation of the ACA," he said. The "silver lining," he said, is that with the new law, even those who don't receive coverage through their employer will be able to get a plan through the health exchange system.

Predictions vary on the law's effects. 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.

However, health insurance brokers say their business clients are "staying the course" on their current health plans, said John Torinus, co-founder of Successful Entrepreneur Investors and who has served on several health care reform task forces. As a former CEO, he said he considered health coverage a benefit not just to the employee, but also to the employer.

In a presentation to the World Health Care Congress Wednesday, Torinus said corporations have the power to turn the tide of rising health care costs. Consumer-driven plans, as well as employers who help employees make good decisions about spending and lifestyle, are a better answer than dropping employees' insurance. Healthy employees are more productive, take less time off and are happier.

He said more employers are offering health care at the workplace so they can ensure employees receive preventive checks to keep them healthy, the employer isn't saddled with unnecessary referrals and procedures and the employee goes to a less-expensive, better-quality specialist when there are several options from which to choose.

Kent Bradley, senior vice president and chief medical officer of grocery store giant Safeway, proposed that employers could address the rising costs of Medicare by pushing back the time in a person's life that he or she starts being unhealthy.

Employers are better able to provide incentives — employees at Safeway pay premiums based on their behaviors, and they can save up to $760 per person — as well as a supportive workplace to help people make healthy lifestyle choices. So rather than having a population of seniors dealing with chronic disease from obesity, such programs could stave off illness until a population turns 75 or older, he said.

Hyman said he expects employers to continue to offer insurance.

"I think, frequently, employers are thinking and projecting based on one or two factors," he said. "But it will be interesting to see what they do with a range of considerations."