Employers, workers, and the future of employment-based health benefits.

Abstract

EBRI'S BIANNUAL POLICY FORUM: This Issue Brief summarizes presentations at EBRI's 65th biannual policy forum, held in Washington, DC, on Dec. 10, 2009, on the topic, "Employers, Workers, and the Future of Employment-Based Health Benefits." The forum brought together a wide range of economic, benefits, management, and labor experts to share their expertise at a time when major health reform legislation was being debated in Congress. The focus: How might this affect the way that the vast majority of Americans currently get their health insurance coverage? THE EMPLOYMENT-BASED HEALTH INSURANCE SYSTEM: Most people who have health insurance coverage in the United States get it through their job: In 2008, about 61 percent of the nonelderly population had employment-based health benefits, 19 percent were covered by public programs, 6 percent had individual coverage, and 17 percent were uninsured.

Differences, agreements: Not surprisingly, given the deep conflicts that exist over President Obama's health reform plan and the different bills that have passed the House and Senate, benefits experts also do not agree on what "health reform" will mean for either workers or employers. Views ranged from "Will anyone notice?" to predictions of great upheaval for workers and their employers, patients and health care providers, and the entire U.S. health care system. One point of consensus among both labor and management representatives: Imposing a tax on health benefits is likely to cause major cuts in health benefits and might result in structural changes in the employment-based benefits system. A common disappointment voiced at the forum was that the initial effort to reform the delivery and cost of health care in America gradually became focused on just financing and coverage of health insurance.

Recent trends: The ever-rising cost of health insurance affects different employers and workers in different ways--with small employers and low-wage workers being the most disadvantaged. With health premiums having risen almost five times as much as the overall rate of inflation since 2000, employers face unsustainable cost increases in health benefits. For a minimum-wage worker, the cost of family coverage (averaging about $13,700 a year in a small firm) exceeds their total annual income (about $11,500 a year). Small employers, if they offer health benefits at all, pay proportionately more than large employers for the same health coverage.

Public opinion: As reflected by the debate in Congress, the American public has conflicted opinions on both the U.S. health care system and on reform: Surveys find that people tend to be satisfied with the quality of their own care but not with costs and access, and a majority rates the system as fair or poor. Opinions divide sharply along partisan lines.

Perspectives: While large employers tend to express continued commitment to health benefits, small employers see themselves strongly disadvantaged by the current system. Consultants report many employers privately want to drop benefits to control costs, but realize there are risks to doing so and none wants to be first. Employers express strong interest in wellness and disease management programs as a way to control costs, even though some experts say there is no evidence these work. Consumer-driven health plans are expected to continue their slow rate of growth.