In May 2012, the Employee Benefit Research Institute (“EBRI”) issued a report showing that the percentage of workers covered by employer-sponsored health care coverage (measured through April 2011) continued to fall despite improvement in the economy. Employer-sponsored health care coverage is the most common source of health care coverage for workers who exceed the poverty line and who are not yet eligible for Medicare. It covers approximately 69% of workers, 46% of non-working adults and 55% of children.
The EBRI report notes that there is a generally recognized link between unemployment rates and employer-sponsored health care coverage. This can be shown by data collected from the recent recession, measured from December 2007 through June 2009, showing that the percentage of workers with employer-sponsored health care coverage fell from 60.4% to 55.9% as measured by EBRI through August 2009. As the economy improved, the percentage rate recovered slightly to 56.5% by December 2009. Nevertheless, in April 2011, the percentage of employer-sponsored coverage fell even further to 55.8%, with preliminary indications of a decline in June 2011 to 55.2%.
Another finding from the EBRI report is that most uninsured workers reported that they did not have health care coverage because of cost. Moreover, the percentage of uninsured workers citing cost as a reason for their uninsured status rose to 86% in May 2009 and continued to climb to 90% in June 2011. (This data does not differentiate between the cost of employer-sponsored health care coverage and individually-purchased health insurance policies.)
The continued decline in the percentage of workers receiving employer-sponsored health care coverage poses a particular challenge to the implementation of the Patient Protection and Affordable Care Act of 2010 (“PPACA”). The employer responsibility provisions of PPACA impose tax penalties if employer-sponsored health care coverage does not provide a certain level of benefits, with a higher level of tax penalties for employers that do not sponsor any group health plans. The employer responsibility tax penalties have been widely reported to cost less to an employer than the actual cost of providing health care coverage to workers. When the employer responsibility provisions of PPACA become effective in 2014, there could be a further decline in the percentage of workers with employer-sponsored health care coverage if employers elect to drop coverage and instead pay the tax penalties under PPACA. As the purpose of PPACA is to expand health care coverage, any reduction in coverage in the workplace is likely to have the opposite effect of increasing the number of uninsured workers. However the Supreme Court of the United States decides on the constitutionality of PPACA in mid-June, the declining rates of employer-sponsored health care coverage continue to make headlines.
A copy of the EBRI report may be found here.