The number of Massachusetts employers offering health insurance has increased since the landmark 2006 state health-care reform, but fewer employees are enrolling.
New state data shows that the decrease in participation among workers in company health insurance came despite a reversal in 2010 of a decade-long downward trend in employer health premium contributions.
The report by the Massachusetts Division of Health Care Finance and Policy confirms what most Massachusetts employers already know – premiums for both individual and family health insurance plans have almost doubled since 2001. There are also some surprises - premiums are rising faster for larger companies than for smaller ones leaving companies with more than 50 workers paying the same for health insurance as companies with fewer than 50 employees.
The findings provide a fascinating look at the health insurance market as policymakers, employers, doctors, hospitals and insurers prepare to undertake an effort to rein in the spiraling cost of health care. A consensus appears to be developing around a plan to change the manner in which employers and consumers pay for health care to a model that controls costs and rewards efficiency.
The state report shows that the percentage of Massachusetts employers offering health insurance to their workers jumped from 72 percent prior to the 2006 reform to 77 percent in 2010. Employer-sponsored health insurance remains slightly more prominent in the Bay State than in the rest of the country, where 69 percent of companies offer coverage.
The highest percentages of employers offering health insurance were found in manufacturing and finance/insurance (86 percent), followed by wholesale trade and transportation (84 percent). The lowest percent was in construction (62 percent) and retail trade (69 percent).
The numbers appear to dispel fears among some policymakers that the 2006 reform would prompt employers to terminate their health insurance programs and instead pay a fair-share assessment. AIM’s own biennial Benefits Survey finds that employers remain committed to offering health insurance as a means of attracting key employees.
The percentage of eligible workers who enrolled in their employer’s health insurance plan initially rose from 78 to 80 percent from 2007 to 2009, but then dropped back to 75 percent in 2010. The proportion of employees enrolled in company sponsored health plans peaked at 85 percent in 2003.
“All of the numbers underscore the crisis being faced by both employers and their workers in coping with the soaring cost of health insurance,” said Eileen McAnneny, Senior Vice President of Government Affairs at AIM.
The state report shows that average employer contributions to health premiums rose from 72 to 75 percent for individual plans from 2009 to 2010 and from 68 percent to 70 percent for family plans. Employer contributions had declined steadily from 82 percent to 72 percent from 2001 to 2009.
Karen Choi, Senior Vice President of Management and Human Resource Services at AIM, said the reversal may represent a correction among companies that cut back during the economic downturn but now wish to re-establish themselves as competitive destinations for talented employees.
“As the economy recovers, albeit slowly, companies are turning their attention to hiring and retention. Merit budgets are up for 2011 and employers are also revisiting the design of their health benefit programs,” Choi said.
Other key findings in the state report:
- Median premiums for individual health insurance coverage rose 8 percent from 2009-2010, while premiums for family plans grew 6 percent.
- Premiums paid by large companies with 50 or more workers rose 12 percent for individual plans and 11 percent for family plans in 2010. Those increases were larger than the 8 percent and 5 percent jumps faced by small employers.
- Companies with more than 50 employees remain more likely than smaller firms to offer health insurance coverage. Ninety seven percent of companies with 50 more workers offer health insurance, compared to 69 percent of employers with 10 or fewer workers.
- Nearly all large firms offering health insurance offer at least one plan through a pre-tax IRS Section 125 Plan (92 percent), compared with 66 percent of firms with 50 or fewer employees. Companies of more than 11 employees without a Section 125 plan may be subject to fiancial penalities under the health reform law.
- Most firms that do not offer health insurance coverage to their employees choose not to do so because premiums are too high (92 percent), their firm is too small (88 percent), or they think their employees have access to coverage through some other means (82 percent).
- Seventy-one percent of Massachusetts employers report that their part-time employees are not eligible for their employer-offered health insurance. Small employers with 50 percent or more of their employees working part time are the least likely to offer health insurance.
- Forty percent of companies with 11 or more employees report that they are not familiar with the Fair Share Contribution policy under Massachusetts Health Reform.
- The surge in enrollment that has pushed the rate of people with health insurance in Massachusetts past 98 percent has come primarily from subsidized programs. The percentage of people who receive health insurance through MassHealth, the state Medicaid program for low-income residents, grew from 14 to 16 percent from 2006 to 2010, while those obtaining coverage through the subsidized Commonwealth Care program went from 0 to 3 percent and individual purchases doubled from 1 to 2 percent.