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Life Health > Health Insurance > Health Insurance

Small employers are dropping health plans, EBRI says

By Allison Bell

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The percentage of very small employers offering health benefits fell sharply between 2013 and 2015, and the percentage of all small employers that offered coverage also fell.

Paul Fronstin, an analyst at the Washington, D.C.-based Employee Benefit Research Institute, has published that conclusion in a new review of data from the Medical Expenditure Panel Survey Insurance Component. His numbers conflict with small-group numbers reported earlier this month by analysts at another Washington-based think tank, the Urban Institute.

The U.S. Census Bureau conducts the MEPS survey for the federal Agency for Healthcare Research and Quality. The MEPS team polled 40,000 private U.S. establishments in 2015 alone.

The share of employers with fewer than 10 employees that were offering health benefits fell to 22.7 percent in 2015, from 28 percent in 2013, according to the MEPS data.

The 5.3-percentage-point drop means the actual number of U.S. micro employers offering health benefits fell about 19 percent over than period.

In other MEPS results, for that same two-year period:

  • For employers with 10 to 24 employees, the share offering health benefits fell to 48.9 percent, from 55.3 percent.

  • For employers with 25 to 99 employees, the share offering health benefits fell to 73.5 percent, from 77.2 percent.

  • For employers with 100 to 999 employees, the share offering health benefits rose to 95.1 percent, from 93.4 percent.

Federal regulators are gearing up to impose an Affordable Care Act shared responsibility penalty on some employers over a certain size limit that fail to offer what the government classifies as affordable health coverage with a minimum value. The employee counting rules and other rules apply to employers with 50 or more full-time equivalent employees.

Other analysts have posted their own small-group numbers

Earlier this month, Fredric Blavin and other analysts at the Urban Institute, reported, based on data from its own Health Reform Monitoring Survey, that the percentage of workers at small employers who say they were offered employer-sponsored health benefits, or took up the benefits, stayed about the same between 2013 and 2015. 

Related: Think tank says small-group market is still alive

Analysts at Mark Farrah Associates found, based on health insurer data filed with state insurance regulators, that the number of small-group health insurance plans fell about 25 percent between 2013 and 2015, to 1.1 million. The analysts at that firm, which is located in Portland, Maine, reported that the number of people covered by the small-group plans health insurance fell about 19 percent, to 13.5 million.

Fronstin says his analysis shows small-group plan numbers began to fall around the time of the Great Recession.

“When the 2007-2009 business recession took hold and unemployment rates rose to around 10 percent, many smaller employers that had been sponsoring health plans dropped the coverage, leading to fewer workers with such coverage,” Fronstin writes.

The smallest employers’ willingness to drop health benefits may have accelerated since 2013 because they know employees can now get subsidized health coverage through the Affordable Care Act exchange system, Fronstin says.

Soft economic growth may have also made small employers more cautious about taking on financial commitments, such as commitments to offer health benefits, he says.

Related:

EBRI: Self-insured plans continue to gain share

AHIP: More Eligible for HSAs

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