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Employer health plans slip away

By Jay MacDonald · Bankrate.com
Friday, May 11, 2012
Posted: 10 am ET

America's employer-based health insurance landscape continues to erode as fewer companies offer coverage and fewer employees sign up for it, according to a new issue brief by the Employee Benefit Research Institute.

Employer health plans have been in a slow death spiral since 2002, mostly because fewer and fewer workers have access to coverage, according to EBRI senior research associate and brief author Paul Fronstin.

Between 1997 and 2010, the percentage of workers offered insurance by their employer fell from 70.1 percent to 67.5 percent. Not surprisingly, the number of workers covered by those plans declined from 60.3 percent to 56.5 percent during the period.

Only logical: If your employer doesn't offer health insurance, you can't sign up for it.

But even where employer plans exist, enrollment has eroded. Between 1997 and 2010, the "take-up rate," meaning those who took coverage when it was offered, fell from 86 percent to 83.6 percent.

How come? Fronstin found that the number of workers who turned down coverage due to cost increased from 23.2 to 29.1 percent during the period.

Some of the decline can be directly linked to the 2007-2009 recession. The study found that the number of adults younger than age 65 with employer-based health insurance declined from 62.4 percent in 2008 to 58.7 percent in 2010.

Corporate restructuring to survive the downturn had an impact as well.

"Workers were much more likely to report that they were not eligible for health benefits because they worked part time," Fronstin says. More than two-thirds (67.2 percent) of workers reported that they were ineligible for their employer's plan because of their part-time status in 2010, up from one-half in 1997.

As a result, the likelihood that a worker was uninsured, a figure that had remained flat between 1997 and 2005, jumped t 17.8 percent in 2010.

Fronstin says he hopes his findings will serve as a baseline against which to measure the effect of health care reform on employment-based health benefits in the future.

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