Published April 12, 2013
Employees are increasingly losing employer-sponsored health-care plans, but they can’t blame the new health-care reform entirely for their lost coverage. New data show employers around the country have been dropping insurance coverage for their workers over the past decade in an effort to reduce their costs as health-care prices soar.
In the past ten years, employer-sponsored health insurance has fallen by about 10%, according to the Robert Wood Johnson Foundation's health-care coverage team.
The report found that employer-sponsored coverage fell from 69% in 1999 to 60% in 2010 and is not limited to certain regions of the country. The amount that workers pay for their coverage more than doubled in the same decade to $1,056 from $435 for individuals and to $3,842 from $1,526 for families.
Under the Patient Protection and Affordable Care Act, employees with 50 employees or more are required to offer coverage to their workers or pay a $2,000 penalty per worker, per year. Some small companies are opting to pay the fine than offer coverage because it’s cheaper.
Sam Gibbs, senior vice president of national insurance marketplace eHealth Insurance, says the trend has predated the controversial act and is more about cost savings.
"It's always a challenge [for businesses] because what happens is you get rates guaranteed for a year, but health-care carriers will rate you up the next year."
The decision not to offer coverage is a tough one for business owners, says Gibbs, because it could hurt their ability to attract new potential hires.
"As a [former] small business CEO, I have to think downstream-- how does not offering coverage impact me recruiting and retaining employees if I don't offer coverage and my competitor does? I may save $50,000 a year in health-care costs, but I may lose key employees. It's not a black-and-white issue."
Rob Wilson CEO of human resources firm Employco, says the company is fielding calls every day from clients asking about the ramifications of Obamacare. Many are choosing to shift the costs of coverage to their employees to save, he says.
"You also have a good percentage of businesses out there debating, 'Do I keep offering insurance, or pay the tax?'" Wilson says.
Employco clients have for the main part seen their premiums increase, however a small handful have seen costs go down since the ACA was enacted, he says.
"This is behind the rate of people dropping insurance," he says. "They are looking at businesses struggling to cut costs and they won't offer insurance anymore. This becomes a challenge in recruiting when the small-business owner is barely making it."