The ongoing health care debate has revealed a strong current of fear from employees that some types of reforms would threaten their existing group health plans. The strength of this emotion underscores the importance of group health insurance to the American health care system, but overlooks the fact that business health insurance may already be under siege.

For employers, the message to employees is two-fold: first, their business health insurance plan is an important benefit of their employment with the company; second, it cannot be taken for granted.

Group Health Plans at the Core of U.S. Health Care

According to recent data from Employee Benefit Research Institute (EBRI), 61 percent of working-age Americans had health coverage through a job. This confirms the impression that workplace health benefits provide the primary source of health coverage in this country.

With that being the case though, another set of figures from the EBRI report should be especially alarming. That 61 percent of working-age Americans receiving coverage through their jobs is down from 68 percent in 2000. If employer health plans are the pillar on which the U.S. health system rests, it would appear that pillar is eroding.

Reasons for Erosion of Business Health Insurance Coverage

Why has employer heath care coverage been eroding? There would appear to be a few reasons. The most obvious is the rise in unemployment. As more Americans lose their jobs, they also lose health care benefits. However, since the decline in health care coverage exceeds the rise in unemployment, there must be additional reasons.

One additional reason is simply the cost of group health insurance. Health care costs have risen faster than the general rate of inflation, so health insurance premiums have had to rise steeply just to keep up.

The rise in health care costs is a long-term trend. A more recent development has been the severe economic recession of the past couple years. Businesses have been forced to make deep budget cuts to stay afloat, and sometimes group health plans have been one of the victims.

Employers still offering plans despite these conditions deserve extra credit from their employees. At the same time, there is an implicit warning in these trends that no employer can promise health care benefits in perpetuity.

Group Health Insurance and the Health Care Debate

The irony of this situation is that many working Americans have been moved to express concern about the future of their existing group health plans if health care reforms are enacted. Specifically, the concern is that any form of "public option" would be so competitive as to threaten current group health plans, but not so competitive as to represent an attractive alternative. However, the EBRI figures suggest that employer health plans are already on the decline.

To be sure, there are many unknown consequences to new legislation, but clearly there are also consequences to allowing current trends to continue. In the meantime, employees have reason to be especially appreciative of their business health insurance plans. Under normal circumstances, those plans might be taken for granted, but given the health care debate and the erosion of group health coverage, there would seem to be a renewed appreciation for them.

Source

Employee Benefit Research Institute (PDF)