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Costs Aren’t Killing Employer Health Benefits

March 5, 2007
Related Topics: Benefit Design and Communication, Health and Wellness, Latest News
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Reports of the death of employer-provided health insurance may be premature.

Despite growing concerns about the rising cost of health care, employers continue to offer health benefits to employees at rates that have stayed relatively stable since the 1980s, according to a report released Thursday, March 1.

The Washington-based Employee Benefits Research Institute released a report March 1 saying that given the current strength of the economy and its low unemployment rate, employers are willing to underwrite the growing cost in health insurance in order to attract and retain workers.

Since 2000, health care costs have increased 3.5 times the rate of inflation, according to the report, though in the past two years the rate of increase has slowed.

“From my perspective the system is pretty stable, in terms of the number of people covered,” says Paul Fronstin, director of the health research and education program at the institute and the author of the report. “Given what’s happened with health care costs, I’m surprised we haven’t seen greater erosion of coverage.”

A recent survey from consulting group Watson Wyatt Worldwide and the National Business Group on Health estimated that large employers would face health care cost increases of 8 percent in 2008, the same rate they anticipate for 2007.

This combination—a strong economy coupled with a slowdown in health care cost increases—may lead to more employees being offered health insurance through their employer, according to Fronstin.

“Numerous claims concerning the demise of the employment-based health benefits system have been made by the both the political Left and the Right, as well as others,” Fronstin writes in the report. “However, with respect to the number of workers covered by health benefits in the workplace, the sky is not falling.”

In fact, the percentage of workers who reported that their employer did not offer health insurance has climbed from a low of 47.7 percent in 2001 to 50.1 percent today.

The institute culled the data from the Census Bureau’s February supplement to the Current Population Survey and used it to examine where people get their health insurance.

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