The latest data from the Labor Department shows that the percentage of private sector employees in the US offered health insurance through their employer rose from 67 percent in 2017 to 69 percent this year, the Wall Street Journal reported earlier this month. This figure had dwindled from 71 percent in 2010, when the department began conducting this survey, and this latest uptick represents the first year-over-year increase since 2012.
The Labor Department report showed that 86 percent of full-time private sector employees were offered health benefits, along with 21 percent of part-timers. Union members were significantly more likely to be offered these benefits (94 percent) than non-union employees (66 percent). Of those private sector employees offered medical benefits, 72 percent chose to take advantage of them.
Smaller employers, who are not required to offer health insurance under the Affordable Care Act, had driven most of the decline over the past eight years: Among organizations with fewer than 50 people, 51 percent offered health insurance to their employees in 2018 compared to 55 percent in 2010. Large businesses, with over 500 workers, have been more consistent in offering these benefits, with the percentage of large employers providing health insurance hovering near 90 percent since 2010.
The ACA mandates that organizations with 50 or more full-time equivalent employees offer at least a minimum standard of health benefits to employees working 30 or more hours a week, or pay a penalty of $2,000 per employee. Most large businesses already offered medical benefits before the ACA took effect and continued to do so, but some mid-sized employers have chosen to pay the penalty instead, as the cost of covering their employees would be greater, Paul Fronstin, director of the Health Research and Education Program at the Employee Benefit Research Institute, told the Journal.
Health care costs have been rising in the US over the past few years, prompting many employers to look for ways to cut down the cost of providing employee health benefits, whether by passing more of these costs on to employees or by pursuing self-funded or value-based health care schemes instead of traditional group health insurance.
These cost increases are driven partly by natural factors like an aging population, but government actions have also had a significant impact. To compensate insurers for the cost of meeting higher regulatory standards with regard to minimum coverage requirements and pre-existing conditions, the ACA included billions of dollars in reinsurance funding to help insurance plans cover high-cost patients, referred to as cost-sharing reduction (CSR) subsidies. President Donald Trump ordered the end of CSR payments last year, throwing into doubt the long-term sustainability of the health insurance markets established by the ACA.
Congress declined to fund these subsidies in the spending bill passed earlier this year, which also zeroed out the tax penalty levied on Americans who fail to obtain health insurance coverage, effectively ending the ACA’s controversial individual mandate. Meanwhile, the Trump administration is also expected to suspend risk-adjustment payments to insurers this fall. These changes to the regulatory architecture of the ACA are expected to drive insurance premiums higher next year in both the individual and group health insurance markets.
On the other hand, the US labor market is the tightest it has been in nearly two decades, which means employees have more power in the job market and employers have to work harder to attract and retain them. Businesses with 50 to 499 workers accounted for most of the increase in health insurance offerings this year, which might reflect these employers’ need to compete with larger firms for talent.
Labor market dynamics are likely driving new growth in employer-provided health insurance even as costs rise, Glassdoor’s chief economist Andrew Chamberlain told the Journal. A recent survey from Glassdoor indicated that 63 percent of US job seekers consider benefits one of their top considerations in researching prospective jobs. At CEB, now Gartner, our Global Talent Monitor data shows that health benefits are a uniquely important driver of attraction in the US, with over 43 percent of US candidates naming it among their top five attributes when considering an employer, compared to 19 percent worldwide.