More workers choosing to opt out of coverage

Health coverage

Fewer Americans can afford the health coverage packages offered by their employer. Image: Korean Resource Center/Flickr/CC BY-SA

A new report from Washington shows that the number of American consumers enrolled in employer-based insurance programs is continuing to drop.

More workers opt out of coverage

The Employee Benefit Research Institute (EBRI), which looked at federal data on employees aged 18 to 64, found that the number of working consumers getting health insurance through their employers in their own names had dropped to 55.8 in April of last year, which is the most current statistic available. That is a full five percent light of what it was in Dec., 2007, just prior to the Great Recession.

According the EBRI’s press release, employer-provided insurance is the most common type in the U.S.:

“Employment-based health benefits are the most common form of health insurance for non-poor and non-elderly individuals in the United States, covering 69 percent of workers, 35 percent of nonworking adults, and 55 percent of children.”

Too costly, some say

Cost is the reason most cited by employees for passing on the insurance packages offered at their workplaces. According to the report, 90 percent of those who were uninsured said they had been covered at one time but opted out to save money.

Wages remain stagnant

Partly, that is because employers have been asking their workers to chip in a larger percentage of their paychecks lately. Paul Fronstin, director of EBRI’s health research and education program, said:

“Employers have changed their focus to managing cost by changing the quality of the coverage that’s being provided. You see more cost shifting and more employee responsibility when it comes to the cost of health care services.”

While the monthly premiums of employer-based insurance policies have not gone up tremendously, wages have continued to remain stagnant. With higher deductibles and other expenses, workers feel like they are being asked to slice off a larger piece of their payroll pie. According to Fronstin:

“It’s the value of the plan that’s changed more than the premium.”

While some of those who have opted out have moved on to lower-cost private plans, many have chosen to become dependents on a spouse or family member’s policy. The rate of employees being insured as dependents on the policy of another person has remained flat at about 17 percent.

Others, sadly, have decided to not be covered at all because their income to expense ratio has become so narrow.

Improvement could be slow

As the job market picks up, Fronstin notes, employers will no doubt start offering better insurance packages as incentives to wrangle top employees. But that may yet be some time away.


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