Tag Archives: employer provided health insurance

Coverage Gaps

The Wall Street Journal has an interesting article about large companies in certain industries moving towards employing more part-time workers in reaction to provisions of the Affordable Care Act that will kick in in 2014. What's even more interesting is the graphic that shows the percentage of employees (not including professionals and managers) who are covered by employers' health insurance plans by industry. In other words, the percentage of hourly working stiffs whose employers provide health insurance in different industries. Here's the breakdown:

  • Agriculture: 34% 
  • Services: 41.5%
  • Construction: 46.9%
  • Professional and technical services: 51.4%
  • Wholesale and Retail Trade: 57.9%
  • Health and Social Services: 62.5%
  • Utilities and Transportation: 67.1%
  • Finance: 69.7%
  • Mining and Manufacturing: 71.1%
  • Information Communications and Education: 72.9%
  • Public Administration: 83.9%

That's a lot of working stiffs who don't have even partial coverage from their employers, and a pretty good indication that "Cadillac benefits" are increasingly rare. 

More Employers Questioning Need to Offer Health Insurance

Some of the insights shared at a recent Winston-Salem Chamber of Commerce meeting about the state of the health care industry won't shock anyone who’s been paying attention the last few years:

Keith Kiser, a senior vice president for BB&T Insurance Services, said his group is fielding more questions from employers about the justification for providing health insurance to employees, besides as a carrot to hire and retain quality workers.

“Chief executives and chief financial officers are fully engaged in these conversations these days,” Kiser said, considering the cost of providing health insurance typically ranging from $8,000 to $10,000 for each employee.

The 2011 Kaiser Family Foundation study on employer health benefits, out in September, found 99 percent of large companies — 200 or more workers — offer health benefits, but only 48 percent of those with three to nine employees do and 59 percent of those with 3 to 199 workers do.

Three-quarters of small firms (3-199 employees) not offering health benefits believed their employees would prefer a $2 an hour increase in wages rather than health insurance, Kaiser said.

Kiser said the reality that 1 in 5 consumer dollars goes to health-care costs “does keep you awake a night.”

This trend will likely get more prominent as the new federal health regulations, aka Obamacare, go into effect:

The federal health-care overhaul will allow employers to stop providing health insurance — beginning in 2014 — with their employees going into a government-controlled exchange.

However, employers with 50 or more workers that don’t offer coverage will be required to pay $2,000 for each full-time employee in its full-time work force. The fee begins if at least one employee enrolls in a plan through a health-insurance exchange and receives a federal subsidy. Two part-time workers are considered as one full-time employee.

The top executives at Blue Cross Blue Shield N.C., Novant Health Inc. and Wake Forest Baptist Medical Center said they empathize with businesses’ concerns about health-care costs since they are large employers as well as providers.

So, should you spend $8-10,000 insuring your employees or pay the government $2,000 for not insuring them?  An interesting question, especially when you consider that companies only started offering health insurance in general during World War II as a way to entice workers in a highly competitive hiring market.  It’s a relatively recent phenomenon in American history for companies to provide health insurance to their employees and over the years it became a kind of “least common denominator” in terms of employee benefits packages.  That began to change when health care costs started to explode, and now it looks like health insurance is returning to it’s original role – a very nice perk that can act as a set of “golden handcuffs” for valued employees.