EBRI Issue Brief

Access to Employment-Based Health Benefits System Continues to Grow: Challenges May Be on the Horizon

Oct 26, 2023 19  pages


Many employers were expected to drop workplace health insurance with the introduction of the Patient Protection and Affordable Care Act of 2010 (ACA), and some have done so. But, as this paper finds, there is considerable variation in the trends around those offering health insurance, as well as in eligibility for health insurance benefits, depending on establishment size and other factors.

This paper examines the percentage of employers offering health insurance from 2008–2022, with a focus on 2013–2021, to better understand how health insurance offer rates may have been affected by the ACA in addition to the Great Recession of 2007–2009 and the subsequent economic recovery. The data come from the Medical Expenditure Panel Survey - Insurance Component (MEPS-IC).

The data show:

  • In 2017, the overall percentage of private-sector employers offering health benefits increased for the first time in nearly a decade. In 2008, 56.4 percent of private-sector employers offered health benefits. By 2016, it was down to 45.3 percent. By 2020, it was up to 51.1 percent, but it fell to 48.3 percent in 2022.
  • In 2022, nearly 81 percent of workers employed by private-sector employers were eligible for health benefits. Since 2014, the percentage of workers eligible for health benefits has been trending upward.
  • Since 2013, the percentage of employers with 1,000 or more employees offering health benefits to workers has been consistently near or above 99 percent. Similarly, 97 percent of employers with 100–999 employees offered health benefits in 2022.
  • Smaller establishments have shown more variability in offer rates.
    • For the smallest employers studied, those with fewer than 10 employees, the offer rate declined from 28 percent in 2013 to 22.3 percent in 2020 but increased to 24.9 percent in 2022.
    • Among employers with 10–24 employees, the percentage offering health benefits increased from 48.9 percent to 53.6 percent between 2015 and 2022.
    • Among employers with 25–99 employees, offer rates increased from 73.5 percent in 2015 to 80.1 percent in 2022.

It is highly unlikely that larger and medium-sized employers will conclude that offering their own health plan is not crucial to the attraction and retention of workers. Despite the recent talk of whether the United States is in a recession, unemployment rates are currently at historically low levels. However, when the next business slowdown (and corresponding rise in unemployment rates) takes hold, it will be interesting to see if fewer larger and medium-sized employers continue to offer health coverage. This did not occur during the COVID-19 pandemic.

It’s also possible that certain public policy changes, if adopted, may drive some employers — large and small alike — away from offering health benefits and cause some workers to care less about whether they get health coverage from their employer. The tax exclusion of employment-based health coverage could be changed, an old idea that has recently come to light again. The Biden Health Care Plan and individual coverage health reimbursement arrangements (ICHRAs) may also disrupt the strong link between employment and health coverage.