Employer health coverage declines for seventh year

Seven years in a row.

Since the beginning of the millennium, the number of working Americans with employer-sponsored health-care plans has dropped each year, according to a report prepared by the Washington-D.C.-based Economic Policy Institute, a nonprofit, non-partisan think tank.

In 2000, 68.3 percent of Americans under 65 had employment-based health coverage, the report, released on Oct. 9, said. By 2007, the rate had fallen to 62.9 percent – a decline representing more than 3 million people nationwide.

In Colorado, the rate slipped 6.5 percent during the period, resulting in almost 5,000 fewer people under 65 with employer-sponsored health-care coverage.

The EPI report notes that, while the workers who lost coverage between 2000 and 2007 “are disproportionately young, non-white, less educated and low-wage,” it added that the group also included “workers across the socioeconomic spectrum.”

Why the continuing loss of coverage in America’s most-common form of health-care plan, the employer-sponsored model?

One word: cost.

The cost of health-insurance premiums continues to rise dramatically each year, with average double-digit growth in the last four out of five years. Next year’s premium increase is expected to come in around 7.8 percent, according to a projection by benefits consulting firm Hewitt Associates.

More offering fewer

But even that slight drop in premium cost won’t likely reverse the trend of more American companies – especially small businesses – offering fewer health plans and fewer benefits to their workers and their families.

A study released Oct. 21 by Mercer, a consulting firm that helps businesses design and manage health, retirement and other benefits, showed overwhelmingly (43 percent) that employers with fewer than 500 workers who had stopped providing coverage did so because they simply could no longer afford it.

Asked how much they would be willing to contribute per employee to again offer an employer-sponsored plan, 59 percent said they would pay no more than $50 per month. How far would that $50 contribution go toward covering an employee and his or her family?

Not far, considering that the average annual cost of a family-of-four health-care policy is now more than $12,000, or about $1,000 per month, according to the National Coalition on Health Care.

“This finding highlights how tough it’s going to be to ask very small employers to voluntarily take on the expense of providing health coverage,´ said Linda Havlin, a Mercer spokeswoman. “It also helps explain why even relatively low-cost plans like HSAs (health savings accounts) have not made great inroads with small employers that find it financially challenging to offer coverage.”

The Mercer survey also noted that 49 percent of those employers not currently providing employee health coverage said it was “very unlikely” they would offer such a plan within the next three years.

_’Too big a concern’

“While most employers are committed to helping employees and their families be healthy, productive and financially secure, the results show that cost is simply too big a concern for many small employers,” Havlin said.

Although they are offering less coverage to employees through plans with higher deductibles, fewer benefits and in some cases dropping plans altogether, the Mercer survey found that of the 3,400 employers surveyed, 51 percent rejected any sort of universal, single-payer system.

A fact sheet by the National Coalition on Health Care showed total health-care spending in the United States in 2007 was $2.3 trillion, or 16 percent of the country’s gross national product. That compared to 10.9 percent of Switzerland’s GDP, 10.7 percent of Germany’s GDP, 9.7 percent of Canada’s GDP and 9.5 percent of France’s GDP – all countries with single-payer systems.

In other words, health-care premiums in America keep rising at about five times the rate of wage growth, employers are becoming less inclined to offer health-care plans and the nation is spending far more on its private insurance system than countries with nationalized health-care coverage.

How long can this explosive mixture continue to brew?

Elise Gould, a health economist and author of the EPI report, concludes that a universal system that takes health insurance out of the workplace may be the best solution to head off a health-care coverage meltdown.

“A universal system, one that provides a minimum standard of care to everyone, would provide Americans with access to the type of health care appropriate for the most prosperous nation in the world,” Gould writes in the report. “Taking insurance out of the job market and into the public sector has the potential to provide a stronger safety net, particularly during times of weak labor growth.”

Does that mean she foresees an end of the era of employer-sponsored health-care coverage after 60-plus years as the national model?

“I wouldn’t say it’s ending, because over half of Americans still get insurance through the workplace,” she said. “But we need to make a decision soon. It is declining and we need to look at better solutions to insure more people.”

Steve Porter covers health care for the Northern Colorado Business Report. He can be reached at 970-221-5400, ext. 225, or at sporter@ncbr.com.

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