Employer –Sponsored Benefits

1. Employer –Sponsored Benefits By: Jordan Alkire McDaniel College January 15, 2o11

2. Statistics: • More than 160 million people-over 60 percent of the under 65 population receive health insurance through their employer. • In 2007, 99 percent of companies with 200 workers or more provided health insurance to their employees. • Information gathered from Kaiser Family Foundation (KFF).

3. Advantages: • People enroll when they take a job, not when they are sick, which reduces the potential for adverse selection that typically characterizes the market. • Premiums in the employer group market are more in line with medical expenses, versus those in the individual market. • Administrative costs are 10 percent, in comparison to the 25-40 percent for individual premium dollar (cheaper if you do it through your employer).

4. Advantages Continued: • Good for retention and recruitment efforts. • Attracting employees who are searching for effective coverage. • May be a deciding factor in which organization to work for. • Important in the job search-people are looking for health insurance through their organizations. • Improvements in insurance, or offering better coverage as incentive may persuade employees to stay, or work harder.

5. Weaknesses: • 47 million Americans were uninsured in 2006, which was an increase of 8.6 million from 2000. • This is driven by the voluntary nature of the insurance system, and the high cost per-worker, especially by small employers. • Working in small firms and earning low wages-may not be offered insurance coverage. • Small employers face higher premium and administrative costs per worker, and are less likely to offer coverage.

6. Weaknesses Continued: • In 2006, employees in companies with fewer than 10 people pay an average of 18 percent more in health insurance premiums. • From 2000-2007, the share of business with fewer than 10 employees that offer coverage dropped from 57 percent to 45 percent. • What could be done to fix this? Anything? Why or why not?

7. More Information: • In 2005, 42 percent of workers in firms with fewer than 50 employees who earned less than $15 per hour and worked for employer that offered coverage, only 34 percent were eligible for coverage, and only about 21 percent actually enrolled in that coverage. • Because it was so expensive to enroll due to the fact that the firm was so small and the number of employees was limited. • Does anyone in here work for a small firm? Is your healthcare cost too much?

8. Continued: • If you are a low-wage worker, working in a larger company, you are much better off. • Nearly 2 in 5 low-wage workers in small firms remain uninsured; This is more than twice the rate of higher-wage workers in small firms. • 17 percent of low-wage workers in large firms are uninsured.

9. Looking to the Future: • Public opinion, as well as leaders opinion view the need to expand access to affordable healthcare. This is viewed as the most critical domestic policy challenge facing the nation. • What changes are being made now? • Obama’s healthcare plan? • Certain visits are now covered 100 percent if you have health insurance. • Well visits • Yearly adult physical screenings

10. Reference: • Collins, S. Healthcare Financial Management. Dec. 2007, Vol. 61 Issue 12, p34-37.