Employers Struggling With Health Care Options: EBRI

October 4, 2002 (PLANSPONSOR.com) - As employers struggle with rising healthcare costs, new research offers some insights into how and why employers make health plan decisions.

Not surprisingly, the Employee Benefit Research Institute (EBRI) found that employers offer health benefits to compete for the best workers, with improving the health status of workers a secondary motive.   EBRI also noted that employers typically focus on running their own health benefit programs, not on the broader impact of their practices.

Still, offering coverage cuts both ways in affecting aggregate health coverage levels. Most large firms believe they must offer coverage to full-time employees to be regarded as viable employers.   However, EBRI notes that today a husband and wife often work for different organizations.   On the other hand, employers realize that offering “too generous” family coverage may draw a disproportionate share of dependents – and, as a result, some offer incentives not to enroll in their plans.

Realizing that higher costs to employees may cause low-wage workers to forgo coverage, some employers are calibrating employee premium contributions to wage levels or exploring the possibility of doing so, according to the EBRI research.   Some provide employees with information about government programs, but usually only on request.  

Most Americans under age 65 receive health coverage through employers, according to EBRI, and about 16% of this population was uninsured in 2000.

EBRI notes that because employers do not perceive covering the uninsured as a priority, the business organizations representing them do not focus on this issue.   EBRI suggests that a broader goal to increase coverage levels could be facilitated by increasing employer awareness of the value of health coverage to the success of their businesses and to facilitate employer involvement in community-wide efforts to expand coverage levels.

The Robert Wood Johnson Foundation funded the research. EBRI and its affiliate, the Consumer Health Education Council (CHEC), will use this project in future research.