Trends in Employers Offering Health Insurance

The Employee Benefit Research Institute analyzes the provision of health insurance by employers from 2008 to 2015.   (EBRI Report)   As might be expected, almost every large company offered health benefits throughout this period.  For employers with more than 1000 employees, 99% did so.  First with 100 to 999 workers also held relatively steady, with 92 to 95% providing health insurance.  But smaller employers, who much lower offer rates to begin with, showed a notable decline.  Those with 25 to 99 workers went from 81% offering health benefits in 2008 to 74% in 2015; while companies with 10 to 24 employees went from 66% to 49% and those with less than ten declined from 36% to 23% in this time period.  Companies with more that 50 full-time employees are required to provide health insurance under the reform law, or they pay a penalty.  Understanding the effect of the law is tricky.  For larger companies, health benefits are probably one of the most important factors in worker job satisfaction and retention, so that may impel them to continue offering, even though there could be strategies to make paying the penalty more economically feasible.  These large firms, however, are increasingly shifting premium and service costs to employees, so while they still have access to health benefits, those benefits are hitting their wallets much harder.  Truly small employers probably employ a more complex calculus and generally lack financial reserves or ongoing high profitability to absorb increasing health care costs.  For many, it is easier to rely on the individual mandate, send employees to the exchanges and potentially offer some contribution to the cost of health insurance.  With minimum wage hike pressures as well, it seems likely that most small companies are eventually going to give up on providing health benefits.  The economy is not and has not been strong, and all companies are under profit strain, so we can anticipate that the dual trends of smaller firms dropping health benefits and larger ones shifting the cost will be ongoing for years.