The number of Ohio residents who received health insurance through their employers dropped precipitously over the past decade as fewer employers offered insurance and an even greater number of workers declined coverage when it was offered, according to a report released today by the Robert Wood Johnson Foundation.
About 6.2 million Ohioans, or 63.2 percent of the non-elderly population, received health coverage through their job or a family member’s job in 2011, down from 77 percent in 2000, according to the report prepared by researchers at the University of Minnesota’s State Health Access Data Assistance Center.
Ohio, with a 13.7 point drop, was among five states that saw the largest percentage point drops in employer-sponsored insurance coverage from 2000–2011, including Michigan (-15.2 points), South Carolina (-14.9 points), Indiana (-14.8 points), and North Carolina (-13.3 points).
No state saw an increase in employer-sponsored coverage, although some states remained statistically stable, according to the report, which relied on state-level data from two government surveys sponsored by the U. S. Census Bureau and the Agency for Healthcare Research and Quality.
Overall, 11.5 million fewer Americans got their insurance through the workplace in 2011 than in 2000, the report found.
A variety of factors contributed to the decline, including the staggering rise in unemployment associated with the 2007-2009 recession, said Julie Sonier, SHADAC’s deputy director.
The recession cost Ohio nearly 300,000 jobs as a prolonged slowdown in economic activity led to mass layoffs by major employers, such as General Motors Corp.
“By and large, most people who have employer-based coverage get it from a large employer,” Sonier said. “If more jobs are lost at large firms, you will see an erosion in coverage.”
Skyrocketing insurance costs also contributed to the decline in employer-sponsored coverage as premiums grew faster than many people’s incomes, said Sonier, noting that 81.5 percent of employees signed up for an employer-sponsored plan in 2000, compared to 76.5 percent in 2011.
During that period, the average annual employer-sponsored insurance premium for employee-only coverage rose to $4,847 from $2,429. Meanwhile, family premiums increased to $13,705 from $6,159.
The rising cost of family plans hit Ohio especially hard, according to the report, which found employer-sponsored insurance coverage of family dependents fell from about 41 percent in 2000 to 33 percent in 2011.
“When you’re talking about enrolling dependents, usually the cost that the employee pays is much higher than for individual coverage,” Sonier said.
The typical Ohio employer covers at least 50 percent of the total premium cost for their employees’ health insurance, according to a recent report commissioned by the Ohio Department of Insurance.
However, most firms generally require higher employee contributions for family coverage, with employee’s sharing about 20 percent of the premium cost for single coverage and 28 percent for family coverage, according to the insurance department report.
Still, employers continue to shoulder most of the cost. And depending on the impact of the federal health care overhaul — which is widely expected to drive up premium costs even further — some employers might find it more cost-effective to drop coverage altogether, said Tim Brabender, co-chairman of the Dayton-based employee benefits brokerage, McGohan Brabender.
“If the employer-based plan reaches a certain cost, some employers could throw up their hands and say, “I’m done with this,’” Brabender said.
Under the Patient Protection and Affordable Care Act, employers with more than 50 employees would pay a tax penalty for not offering qualified insurance coverage beginning next year.
But the penalties many not be much of a deterrent, especially for small businesses operating at the margins, Brabender said.
For most employers, the penalty would be $2,000 annually times the number of full-time employees — minus 30.
“As long as they can hang onto their employer-sponsored plan with reasonable (cost) increases, they’ll try to do it,” Brabender said. “But employers will eventually work to an economic decision. If we just have massive (cost) increases on employers without a lot of resources, I think eventually you could see a lot of them exit the market and just pay the penalty.”
Private sector employers in Ohio have already begun to abandon employer-sponsored insurance. The number of such employers offering coverage fell more than 6 percentage points from 65.2 percent in 2000 to 59.0 percent in 2011, according to the SHADAC report.
At least some residents dropped from employer-sponsored plans likely turned to public programs like Medicaid for health coverage, SHADAC’s Sonier said.
“This is not just a story about employers dropping insurance coverage, or employees not signing up for coverage,” she said. “One of the impacts of declining employer-sponsored insurance is that there is more fiscal pressure on state budgets because you have more people turning to those public sources of coverage or going uninsured.”