The Death Of Employer-Sponsored Health Insurance Is Greatly Exaggerated
Since the passage of the Patient Protection and Affordable Care Act in 2010, health care pundits, wonks, researchers and experts of all kinds have speculated on when—not if—employers are going to get out of the health benefits business and let workers fend for themselves on public and private health insurance exchanges. The thought is employers will give employees a lump sum equal to the employers’ share of their current health insurance premiums and let employees shop for their own coverage.
With the 2017 open enrollment period for state and federal health insurance exchanges to start next month, everyone is wondering whether next year finally will be the year that employers en masse pull the lever and unload the responsibility for arranging health benefits on someone else.
That may happen someday, but it’s not going to happen soon. (And I hope not for another nine years, when I qualify for Medicare.) Buried deep within the government’s latest projections on national health expenditures through the year 2025 are numbers that support my speculation that nothing dramatic is going to happen in the foreseeable future. (Whew.)
Actuaries from the Centers for Medicare & Medicaid Services said 171 million people had employer-sponsored health insurance in 2015 (go.cms.gov/2aJVd4n). That’s up slightly from 2010, when 167.4 million people got health benefits through their employer. By 2025, that number will inch up to 174.8 million. If you plot those numbers on a line, it would be the visual definition of “steady as she goes.”
Total spending on employer-sponsored health insurance is another line, albeit one with a steeper slope. Some $933.3 billion was spent on employer-based health benefits in 2015, and that figure will grow by two-thirds to $1,545.9 billion by 2025, according to the number crunchers from the CMS. Those figures include spending on premiums by both employers and employees.
Before you sneer and say, “Yeah, but how much more of that will be passed along by companies to their workers?” the data say that yes, that will happen, but probably not as much as you would think. The CMS said employers spent $476 billion on health insurance premiums for their workers in 2015, and the agency projected that the amount will grow by more than 61 percent, to $768 billion by 2025.
I’m not a businessman, but I am a consumer. If someone told me that I would have to pay 61 percent more for the same quality and quantity of something, I would tell them what they could do with their venti dark roast. Employers, though, have yet to demonstrate the same behavior when it comes to purchasing health benefits for workers.
Other research backs me up on this, which is why I included it. A survey of nearly 28,000 businesses conducted by the Centers for Disease Control and Prevention and the Agency for Healthcare Research and Quality found “no significant changes” in employer-sponsored health insurance between 2014 and 2015 (bit.ly/2an3YOj). Total enrollment of private-sector enrollees in employer-based plans was slightly up, and the percentage of private-sector employees in employer-based plans was slightly down.
Separately, a report released by the Urban Institute and the Robert Wood Johnson Foundation said the percentage of workers with employer-sponsored health insurance rose to 72.1 percent by March of this year, from 70.8 percent in June 2013 (urbn.is/29HkOtt). That, along with other findings, led the report’s researchers to conclude that the ACA isn’t prompting employers to drop worker health benefits and, in fact, predict that employer-sponsored health insurance “should stay relatively stable under the ACA.”
Now, that doesn’t mean some employers aren’t thinking about it. Some 56 percent of 467 employers surveyed by benefits consultant Willis Towers Watson said public insurance exchanges will be a “viable alternative” to group health plans by 2018 for workers who retire before the age of 65 (bit.ly/2agJPb9).
That said, I think most employers will stay the course for a variety of reasons: tax breaks, employee recruitment and retention, moderation in premium increases, labor agreements, avoidance of bad publicity and just avoiding the hassle of changing. The bigger challenge for workers will be staying employed to take advantage of the health insurance benefits. tcbmag
David Burda (twitter.com/@davidrburda, email@example.com) is editorial director, health care strategies, for MSP-C, where he serves as the chief health care content strategist and health care subject matter expert.
Employers have a new way of evaluating hospitals that they may—or may not—want to include in the provider networks available to covered workers in their health plans. As reported earlier by Twin Cities Business, the federal government updated its Hospital Compare website to include a star-rating system for hospitals (bit.ly/1Rt7DGW). The Centers for Medicare & Medicaid Services awards one to five stars to individual hospitals based on how well they score on 64 measures of clinical performance (go.cms.gov/2ahAYco).
n Of the 132 Minnesota hospitals on the Hospital Compare website, the CMS gave out star ratings to 77. (Fifty-five hospitals were not rated for various reasons.)
n Of the 77, one—the Mayo Clinic Hospital in Rochester—got five stars. Forty-one got four stars; 33 got three; two got two; and no hospital got one star.
n Of the 32 hospitals in a 50-mile radius of downtown Minneapolis, 20 got four stars; seven got three stars; and two got two stars. Three hospitals were not rated. Employers should share the link to the Hospital Compare website with their employees and hold educational sessions to teach them how to use it to make more informed decisions about where to seek inpatient hospital care.