Assuring Access to Employer-Provided Health Coverage

SOURCE: AP/Elaine Thompson

Patti Carter, left, owner of a small mail service business, and Ward Moser sort customers' mail. Escalating costs and coverage gaps in the employer market suggest that as we seek to provide all Americans with guaranteed, affordable health insurance, we must find solutions for those with employer-sponsored coverage as well as the uninsured.

By Karen Davenport | April 23, 2009

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CAP Action's Karen Davenport testifies before the House Committee on Education and Labor. Read the full testimony (CAP Action).

I am honored to be here today to testify on improving health coverage for American employers and American families. As you well know, health care reform is critical to restoring the financial health and well-being of our nation’s families. Reform means reducing the crushing burden of rising health care costs on America’s families, businesses, and governments at all levels. It also means ensuring that everyone has reliable, meaningful, affordable health coverage. Reform efforts that achieve one but not both of these goals will be incomplete. That’s why policymakers and health care experts are considering the idea of a national health insurance exchange—an improved health care market that would offer individuals and employers a new avenue for acquiring private or publicly sponsored health insurance. My focus today, however, is on assuring access to affordable, meaningful coverage for all workers who obtain health coverage through their employer, which in some circumstances may be outside of the national insurance exchange.

Market issues

Problems in the nation’s health insurance markets are one of the driving forces behind health care reform. Headline stories usually focus on problems in the so-called nongroup market, where individuals struggle on their own to obtain meaningful health insurance coverage at a reasonable cost and mostly fail to find it. But the employer market—where 160 million Americans obtain their health insurance—boasts plenty of problems as well. Most striking, of course, is the rapid escalation of premiums for employer-sponsored insurance, which have increased 119 percent since 1998. In addition, nearly 9 million workers employed by larger employers (companies with 100 or more workers) were uninsured in 2007.

The business characteristics of companies influence whether an employer offers coverage. Companies that employ a high proportion of low-wage workers, a high proportion of part-time workers, or a high proportion of younger workers are the least likely to offer health benefits. Workers employed by large companies are most likely to be offered benefits, with 99 percent of companies with 200 or more workers offering health benefits. Yet even the employees of these larger companies cannot be certain they will be eligible for this coverage or that health coverage will be within their financial reach.

Even among these larger firms, for example, 21 percent of workers are not eligible for coverage. And regardless of company size, only 71 percent of employees who work for companies with many low-wage workers are eligible for coverage, compared to 81 percent of employees at companies with a low proportion of low-wage workers.

CAP Action's Karen Davenport testifies before the House Committee on Education and Labor. Read the full testimony (CAP Action).