State of the Industry 2011: Employers offering coverage

October 1, 2010

Incentives for large employers to offer coverage are still there

Incentives for large employers to offer coverage are still there, according to Linda J. Blumberg, senior fellow at the Urban Institute's Health Policy Center.

"For large employers, my expectation is that there is going to be very little change in sponsoring coverage, and there may even be a modest increase," she says. "The reason being is that there really is no change of significance in incentives. Large employers offer coverage to attract the workers they want to employ. They already do that now with no penalties in place if they don't. At least some of the folks who will have to obtain coverage will prefer to sign up through employers and would be willing to trade off some wages for health insurance coverage. I expect some large employers who don't offer coverage now will begin to offer it."

According to the Commonwealth Fund, 98% of firms with 200 or more employees offer health benefits compared to only 46% of firms with fewer than 10 employees.

"Small insurance subsidies that are short-term and the health exchange options may stem the decline somewhat, but the decline is already there," she says. "We may see a continued decline in small employers, but that's been consistent over the last 10 years."

Blumberg believes not everyone is considering all of the costs and tax implications associated with health exchanges.

"I hear a lot of pundits making those kind of remarks-that large employers will stop offering coverage-but we've done a lot of micro-simulation models, and I don't see where it's coming from," she says. "The larger firms have administration costs for providing coverage that are significantly below what we think administration costs will be for health exchanges."

Many are expecting that outlays for broker commissions also will fall significantly by 2014.