There is massive speculation as to what the impact of healthcare reform will have on employer sponsored health insurance. Some analysts believe that the subsidies in health exchanges for small businesses will make the business opt to not provide coverage, thus decreasing employer-sponsored health insurance.
According to a study released by Gfk Custom Research North America, more than half of all employers have said they would continue their health insurance plans even after the Affordable Care Act has been fully enacted.
56% of major employers indicated they would continue offering health benefits to their employees, while 12 percent expressed that they were very likely to drop employer coverage.
The downward trend of employer sponsored health insurance
According to research from the Kaiser Family Foundation, 60 % of employers offered a health plans last year. In 2004, health insurance plans were offered by 68 % of employers.
Some troubling numbers indicate that although a lower percentage of employers offer health plans, premiums have risen more that 50%. In 2011, a family health insurance premium cost $15,073 according to KFF numbers, while in 2004 the costs were $9,950.
What factors influence employers’ decision?
It should be noted that along with the individual health insurance mandate that requires individuals buy health insurance or face a fee, there is also an employer health insurance provision. Simply, this provision prohibits employers from dropping health insurance in favor of having each of their employers buy individual health insurance through the state health exchange. The federal government will offer subsidies to smaller businesses so that they can sponsor health insurance.
Larger firms and employers will continue to offer health insurance, the GfK survey only 4% of employers with 500 or more employees even considered dropping health insurance benefits.
Why will larger firms continue offering benefits? Although businesses are trying to save on costs, it is important to understand that health insurance is a valuable asset and necessity with employees. If firms want the best and brightest employees – they need to incentivize them to work/continue working for their company. So along with other workplace factors, such as salary, hours, and vacation time, a steady health insurance plan could be the determining factor for a stronger workforce.
Lastly, the Gfk study revealed that although employers could use health insurance as an incentive, costs produce strain. The survey showed that 30% of employers indicated that they had a negative attitude about health reform since their costs have risen 9% annually for the past three years.
This means employers will continue to sponsor health insurance plans, even if they have to front more costs – the competition is too high to drop it!
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