Employer-Sponsored Health Insurance: Down but Not Out

Frustrated with Inability to Control Costs, Employers Shift Costs to Workers

News Release
Oct. 27, 2011

Alwyn Cassil (202) 264-3484 or acassil@hschange.org

WASHINGTON , DC—Rising costs and the lingering fallout from the great recession are altering the calculus of employer approaches to offering health benefits, according to a study released today by the Center for Studying Health System Change (HSC).

Employers responded to the economic downturn by continuing to shift health care costs to employees, with the trend more pronounced in small, mid-sized and low-wage firms, according to the study coauthored by HSC Senior Consulting Researcher Jon B. Christianson, Ph.D., of the University of Minnesota; HSC Senior Researcher Ha T. Tu, M.P.A.; and Divya R. Samuel, an HSC research assistant.

At the same time, employers and health plans are frustrated with their inability to influence medical cost trends by controlling utilization of medical services or negotiating more-favorable provider contracts, the study found.

“Some believed that patient cost sharing had reached a saturation point and that employers would have to find alternatives to moderate premium increases,” said HSC President Paul B. Ginsburg. “The recession and sluggish recovery changed those views, and employers continued to pass more costs along to employees.”

The study’s findings are detailed in a new HSC Issue Brief—Employer-Sponsored Health Insurance: Down but Not Out—available online at www.hschange.org/CONTENT/1251/. The study, funded by the Robert Wood Johnson Foundation and the National Institute for Health Care Reform, is based on HSC’s 2010 site visits to 12 nationally representative metropolitan communities: Boston; Cleveland; Greenville, S.C.; Indianapolis; Lansing, Mich.; Little Rock, Ark.; Miami; northern New Jersey; Orange County, Calif.; Phoenix; Seattle; and Syracuse, N.Y. HSC has been tracking change in these markets since 1996.

In an alternative attempt to control costs, employers increasingly are turning to wellness programs, although the payoff remains unclear. Employer uncertainty about how national reform will affect their health benefits programs suggests they are likely to continue their current course in the near term, according to the study. Looking toward 2014 when many reform provisions take effect, employer responses likely will vary across communities, reflecting differences in state approaches to reform implementation, such as insurance exchange design, and local labor market conditions. Other key findings include:

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The Center for Studying Health System Change is a nonpartisan policy research organization committed to providing objective and timely research on the nation’s changing health system to help inform policy makers and contribute to better health care policy. HSC, based in Washington, D.C., is affiliated with Mathematica Policy Research.