Summary
Employers’ commitment to worker health dates back to the late 1800s, but it was during World War II that employers began to offer more formal health coverage. Employers today offer health coverage because of their belief that offering it has a positive impact on the overall success of the business. It can be argued that the Employee Retirement Income Security Act of 1974’s (ERISA’s) preemption of state law has created an environment of nationally uniform standards for employee benefit plans, thus giving employers the regulatory means to continue to offer health benefits as they do today. Despite predictions spurred by the Patient Protection and Affordable Care Act of 2010 (ACA) that employers would stop offering coverage, employment-based health insurance remains resilient.
In this paper, we examine how the availability of employment-based health coverage has been changing. We examine employer sponsorship of coverage as well as employee eligibility for coverage.
Key Findings:
- Coverage Trends: The percentage of the nonelderly population with employment-based health benefits was at or near 70 percent from 1970 to 1989. By 2024, 61 percent of the nonelderly population had employment-based health coverage. Employment-based coverage remains the most common source of health coverage among the nonelderly population.
- Employer Sponsorship: Across 1996–2024, the percentage of employers offering health benefits has ebbed and flowed. After a near record low in 2023, the percentage of employers offering health benefits increased slightly to 49 percent. Declines have been concentrated among small employers, while large employers have remained stable.
- Eligibility Rates: Despite small employer declines, worker eligibility for health benefits has stayed mostly constant since 1996, ranging from 75–81 percent. In 2024, 80.2 percent of private-sector workers were eligible for health benefits. This stability reflects the dominance of large employers, which employ about two-thirds of all workers.
- Labor Market Shifts: The percentage of workers employed full time rose from 63 percent in 2014 to 69 percent in 2024. After a long-term decline, the share of firms with mostly low-wage work forces ticked up from 15 percent in 2023 to 21 percent in 2024. The share of workers in large firms increased slightly, from 65 percent in 2013 to 67 percent in 2024.