Smaller Employers In Texas Opt Out Of Insuring Individuals

The U.S. Government Accountability Office recently reported that fewer employers in Dallas, Houston, throughout Texas and the rest of the U.S. are offering health benefits. This is mostly because many new small employers have chosen not to pay for group health insurance due to rising costs and administrative headaches.

The study reported an eight-percentage point drop in the share of small employers that offered benefits to individuals from 2001 to 2006, from 68% to 60%. It also that reported that many employers who offer health benefits now insist that their employees pay a higher share of the costs.

In addition, the GAO said that some employers are now offering consumer-directed health plans. These plans trade lower premiums for significantly higher deductibles. Or some employers are offering mini-medical plans that provide more limited coverage at lower premiums.

“While the share of large employers offering health benefits remained fairly constant between 2001 and 2006 at about 98 percent, the share of small employers — with 3-199 employees — offering them dropped from 68 percent to 60 percent,” said the GAO in its recent report.

“Health policy experts from one organization interviewed said that this decline is likely due to new employers choosing not to offer coverage rather than existing employers dropping coverage,” the GAO added.

“Some of these recent changes to health benefits may particularly affect low-wage workers who are less able to afford higher out-of-pocket costs, and less healthy workers who use more health services,” added the GAO, which compiled and wrote the report at Congress’ request.

Unfortunately, employees who lose coverage are probably those least likely to be able to bargain for it, the GAO found. “Survey data indicate that from 2001 through 2005, eligibility for health coverage and the extent to which workers are covered have both declined most among low-wage workers”.

Currently, approximately 47 million Americans carry no health insurance — roughly five million in Texas alone. Government programs such as Medicare and Medicaid try to take up the slack by providing health insurance for the poor, disabled and elderly.

This data supports a similar study completed by the Kaiser Family Foundation. In the foundation’s 2005 Annual Employer Health Benefits Survey, it was reported that the percentage of businesses offering health insurance to their workers has declined steadily over the last five years, as the cost of providing coverage continues to outpace inflation and wage growth.

The Kaiser survey found that 20% of employers who still offer health insurance to individual workers now provide a high-deductible health plan option. And it was reported that large firms — those with 5,000 or more workers — are a lot more likely than smaller firms to offer a high-deductible plan option, with 33% offering one in 2005. The survey defined high-deductible health

plans as those with at least a $1,000 deductible for single coverage or at least a $2,000 deductible for family coverage.

Despite the growing availability of high-deductible health plans, relatively few workers are enrolled in these sorts of consumer-driven arrangements. The survey estimates that in 2007 about 2.3% of non-federal covered workers, or 1.6 million people, are enrolled in high-deductible health plans with a health reimbursement arrangement (HRA), and about 1.2%, or 810,000 people, are enrolled in plans that are eligible for use with a health savings account (HSA).

Other highlights from the Kaiser 2005 survey include:

* Firms that do not offer health benefits to their workers — the overwhelming majority were small firms — were most likely to cite cost as a key factor.

* Type of insurance. In 2005, Preferred Provider (PPO) plans were more common than ever, with 61% of all employees with health coverage enrolling in a PPO.

* Future plans. Looking toward the future, more than 40% of large firms (200 or more workers) offering health benefits said they were “very likely” to ask employees to pay more in premiums the next year, while just 15% of smaller firms said they planned to do so.

* Utilization and disease management. About eight in 10 covered workers (81%) were in a health plan that used case management for high-cost claims. Among workers in these plans, virtually all (99%) were in a plan that provided management for diabetes. Large majorities were also in plans that provided management for asthma (86%), hypertension (82%), and high cholesterol (66%).

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