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Memo to Media: Employers Have Been Slashing Insurance, Shifting Costs for Years

November 25, 2013

Last week, Americans learned about the GOP playbook laying out the strategies, tactics and talking points the Republican faithful should use to demagogue the Affordable Care Act. A quick glance at Monday's headlines from the Chicago Tribune ("Employers could drop health care"), the Wall Street Journal ("Companies Prepare to Pass More Health Costs to Workers") and The Hill ("O-Care mandate could pass costs to workers") shows the GOP's latest sound bite du jour.
Of course, reading those dire predictions, you'd never know that those exact trends in employer-provided health insurance have been underway for years and have resulted in the number of uninsured Americans jumping from 37 million in 2000 to over 50 million today.

Including Medicare, roughly 263 million Americans--about 85 percent of the population--already have health insurance. As the nonpartisan Congressional Budget Office (CBO) estimated in May, 156 million are workers and their family members who received insurance from their employers. But as the chart above from the National Institute for Health Care Reform (NIHCR) shows, the percentage of Americans getting coverage through their workplace has been dropping for years, and nose-dived during the recession.
But that's not the only indicator of an employer health insurance system "coming apart at the seams." For years, businesses have been shifting the costs for health care onto their workers by hiking employee contributions, raising deductibles, dropping spousal coverage and more. In its 2009 Employer Health Benefits Survey released six months before Obamacare became law, the Kaiser Family Foundation found the pace of cost-shifting was accelerating. As the Washington Post reported the findings from KFF:

Forty percent of employers surveyed said they are likely to increase the amount their workers pay out of pocket for doctor visits. Almost as many said they are likely to raise annual deductibles and the amount workers pay for prescription drugs.
Nine percent said they plan to tighten eligibility for health benefits; 8 percent said they plan to drop coverage entirely. Forty-one percent of employers said they are "somewhat" or "very" likely to increase the amount employees pay in premiums.

Just days before President Obama signed the Affordable Care Act into law the following March, a study by the National Business Group on Health of 507 companies with over 1,000 employees found that:

Many say they may charge more to cover spouses, tighten eligibility standards for their health plans and dispense financial rewards or penalties based on the results of certain lab tests. At some companies, overweight employees could be excluded from the most desirable plans.
Meanwhile, employees at many companies can expect significantly higher premiums, deductibles and co-payments.

Again, this was prior to the passage of Obamacare and specifically its employer mandate whose implementation has been pushed back to 2015. As Kaiser's latest employer survey showed, between 2006 and 2013, the percentage of workers who employer-based plans required a deductible jumped by half from 52 to 78 percent. During that same time frame, the share of workers whose deductible topped $1,000 a year almost quadrupled from 10 to 38 percent.

Nevertheless, CNN Money recently asked, "Are employers dumping health benefits because of Obamacare?" CNN cited anecdotal examples of organizations like Trader Joe's and Romney-aligned Home Depot shifting part-time workers to the ACA exchanges and others like the University of Virginia and UPS which announced plans to end benefits for spouses with coverage options elsewhere. But as the Wall Street Journal and others have documented, part-time employment is falling as businesses add more full-time positions. And as the CNN article also noted, "Obamacare is not the only reason behind the benefits adjustments."

"An increase in costs of a few percent isn't enough to cause widespread changes in benefits," said Larry Levitt, senior vice president at the Kaiser Family Foundation.
Other factors, such as the improving economy, are contributing to rising costs since people use more medical care when the economy is healthier.
Also, companies have been shifting costs to employees for years. While UPS will limit its spousal coverage, it is not the first company to do so.

That, to put it mildly, is an understatement.
It also happens to be the same understatement U.S. media outlets reproduced on Monday. While The Hill briefly mentioned that "the share of people receiving employer-based health insurance has been on the decline since the 1980s," the Journal noted only, "Employers have been pushing more of the cost of providing health insurance on to their workers for years."


Jon Perr
Jon Perr is a technology marketing consultant and product strategist who writes about American politics and public policy.

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