High Prices, Pandemic Strain Employer-Backed Insurance

by Peter Johnson

Pandemic-driven macroeconomic uncertainty and rising prices remain the biggest challenges for employer-sponsored insurance plans, according to experts. The cost of health insurance premiums has made employer-backed health insurance unaffordable to the point of being useless for many families, while the pandemic has created a volatile environment for many employers, particularly small businesses.

During a Jan. 26 panel hosted by the Bipartisan Policy Center, a Washington, D.C. think tank, employer health insurance experts sounded off on the myriad difficulties facing plan sponsors and beneficiaries. Worries over cost and the pandemic took up most of the discussion.

Pandemic didn’t tank employer coverage

• Katherine Hempstead, senior policy adviser at the Robert Wood Johnson Foundation, pointed out that while the pandemic has been disruptive to employers and plan members alike, it hasn’t led to a meaningful decline in employer-based health insurance enrollment.
• “Even though we had a really major economic dislocation….we didn’t see a lot of disruption in ESI [employer-sponsored insurance]. To a large extent, that’s because many of the people losing their jobs didn’t have ESI…to begin with.”
• That said, “it’s a market under strain. Although the coverage rates have remained fairly steady, they’re not growing either,” explained Sabrina Corlette, an attorney and founder of Georgetown University’s Center on Health Insurance Reforms. According to Corlette, ESI covers roughly 60% of people under the age of 65, the threshold of Medicare eligibility.

Workers get less for their money

• The value of plans to members has also declined, Corlette said.
• “Our premiums have jumped close to 50% in the last decade. And when you compare that to wage growth, which is at 32%, and inflation, which is at 23%, our premiums are climbing much, much faster than both of those trends.”
• She added that “in spite of all this data that’s been coming out for the last 20 years, and the fact that health care costs are hobbling businesses and workers alike, there’s just not a ton of political will to tackle provider prices.”

Are ‘storm clouds’ looming for small firms?

• John Arensmeyer, the founder and CEO of Small Business Majority, said that small businesses have been under particular strain from high prices, especially during the pandemic. Despite that, he said those firms have tended to stick to the fully insured market.
• “There are definitely storm clouds on the horizon. Our polling shows that one in three businesses report they’ve struggled to continue to maintain coverage….I think we’re likely to see some increases [in costs] coming down the pike due to increased hospitalizations around COVID and also people deferring their health care needs.”
• “I also want to remind everybody that small businesses benefited from PPP [Paycheck Protection Program] loans and other loans and grants during the pandemic. But those are basically ended…that may be skewing the numbers. We’re going to have to wait and see how that plays out.”

From Health Plan Weekly