Behavioral Research Associates

Health Care Reform Employers Committed to Health Benefits, But at Tipping Point for Reform, EBRI Finds

A report released Dec. 6 by the Employee Benefit Research Institute disputes the notion that employment-based health benefits are dying, finding instead that large employers are not on the verge of dropping benefits.

In addition, the EBRI report found that the percentage of small employers offering health benefits in 2007 was about the same as it was in 1996, though it expanded between the mid-1990s and 2000, before declining through 2005.

According to the report, Issue Brief No. 312: The Future of Employment-Based Health Benefits: Have Employers Reached a Tipping Point?, data do not show health benefits are disappearing. In fact, between 2005 and 2007, the percentage of small employers offering health benefits was stable, EBRI found.

Long-term access to health benefits also was stable. The percentage of workers reporting that they have access to health benefits through their job was largely unchanged from the mid-1990s and down only slightly from the late 1980s, the EBRI report said. In 2005, 74 percent of workers who were not self-employed reported they were eligible for health benefits through their own job, up slightly from 73.6 percent in 1995.

Although employment-based health coverage has declined, the rates have not dropped precipitously, EBRI found. Between 1994 and 2000, the percentage of workers with health benefits through an employer held steady between 73 percent and 75 percent, but since then, the percentage has declined to about 71 percent, EBRI found.

And yet businesses have reached a "tipping point," according to the report. Although businesses still support employment-based health coverage, they suggest that the status quo must change in the next few years, EBRI found. Individual employers continue to believe that there is a business case for offering health benefits to their workers, and they continue to invest in improving their health programs.

Reforming the employer-based health care system will require careful work. According to Jodi DiCenzo, founder of Behavioral Research Associates, a financial service consulting firm, there are significant lessons for consumerism in health care from the experience employers gained in the world of retirement plans. DiCenzo, who spoke Dec. 6 at an EBRI policy forum, said that despite millions of dollars invested in financial education programs, employers saw disappointing results. While the education programs could influence employees' intentions, they typically did not change their behaviors, she said.

The EBRI study also found that a number of employer organizations are gearing up for a health care debate tied to a new presidency in 2009. Such associations include the HR Policy Association, the Committee for Economic Development, and the ERISA Industry Committee. EBRI noted that the Business Roundtable and the National Federation of Independent Business have joined forces with AARP and the Service Employees International Union to form the Divided We Fail Partnership to urge health care reform.

All of these organizations currently have a health care reform proposal, or are on the cusp of releasing a proposal, EBRI said.

If one major employer were to switch its position on providing health care benefits, other employers might also reconsider their position, EBRI found. Other factors that could cause large employers to alter course on providing health care benefits included the elimination of the employer tax deduction for health benefits, a movement to universal coverage, or the erosion of the federal preemption of the Employee Retirement Income Security Act, the report said.

The issue brief is available at
http://www.ebri.org/pdf/briefspdf/EBRI_IB_12-20073.pdf.

By Sean Forbes