Large employers continue to believe in the value of sponsored health benefits for employees, despite the options available to them under the Affordable Care Act. But small employers are increasingly choosing to pull out of the health benefits business.
That’s what a survey from the Employee Benefits Research Institute (EBRI) found when it examined the percentage of employers offering health insurance from 2008 to 2015. Using data from the Medical Expenditure Panel Survey — Insurance Component, EBRI reported that nearly 100 percent of the largest employers (those with 1,000 or more employees) have continued to offer health insurance through the ups and downs and gyrations of the past seven years.
Even the next level of employers, those with between 100 and 999 workers, have been steady in their insurance plans, with between 92 percent and 95 percent offering coverage.
But a very different picture emerges from the data as companies get smaller. The percent of employers with fewer than 10 employees offering health insurance fell from 36 percent in 2008 to 23 percent in 2015. In the 10 to 24 employee ranges, plans fell from 66 percent of employers to 49 percent. And for those employers just below the “large company” cutoff of 100 employees, the percent dropped from 81 percent to 74 percent.
While major employers tended to offer coverage throughout the recession and still offer it now, the recession rather than the enactment of health care reform spelled the end of employer plans for many small businesses.
The data reveals a downward trend beginning in 2009 and, with the exception of a slight bump in 2013, all small employer categories have followed a pattern of offloading health insurance for employees.
In the full report, EBRI’s Paul Fronstin notes that multiple factors are doubtless behind the decline in insurance coverage offered by smaller employers. He cites rising health care costs in general; a desire to better manage health care costs going forward; the availability of plan options under health care reform; and the lasting effects of the recession.
“Historically, smaller employers have been less committed to sponsoring health coverage than larger employers. One often-cited reason is that smaller firms, more than larger ones, frequently face higher and more volatile increases in health insurance premiums,”Fronstin says.
He also speculates that forces could align to reduce the percentage of large employers that sponsor plans, but that so far, the benefits in terms of recruiting and retention have outweighed the savings possible by no longer offering health insurance to workers.