Employer-Sponsored Health Insurance Programs

The U.S. employer-based insurance market provides group health insurance to most of the working population and their dependents. At the same time, employees can choose to accept or decline employer-sponsored health insurance plans. Employers offer health insurance because it is a tax-deductible benefit and attracts potential candidates for employment.

Employer-sponsored health insurance is the least expensive health insurance option and tends to be attractive to employees because part of the premium is paid by the employer and often covers spouses and dependents.

However, not all employers offer employer-sponsored health insurance programs. The size, industry, age, and structure of the employer are factors that determine whether health benefits are offered. Most large companies and organizations with employee unions offer health insurance benefits.

Many smaller employers with low-wage workers do not offer health insurance because of the high cost of underwriting and administering a program. Moreover, smaller firms have higher attrition rates.

According to an "Employee Benefits Study" done by the U.S. Chamber of Commerce, full-time employees derive greater benefits from employer-sponsored health insurance.

Concerns in the health insurance industry include rising healthcare costs, increasing insurance premiums, the transfer of healthcare burdens to employees, discontinuance of health insurance for retirees and dependents, and services provided to those who are more likely to be unable to pay caregivers.

Healthcare costs are rising due to increases in costs of medical services and supplies. The cost of prescription drugs is unregulated, and medical treatments are often performed without anyone validating their recommendation.

Businesses are interested in developments in the healthcare industry because the employee health program is one of the largest expenses for many employers. In addition, some employers continue to offer employee health insurance to retirees.

Today, employers' decisions with regard to employee benefits like insurance are based on the returns they see on benefits provided. Some employers view benefits as investments, while some perceive them as costs. Those who consider providing employee benefits to be merely another cost tend to look for ways to reduce their expenditures on them. An employer can reduce the cost of its employee healthcare program by shifting the cost to employees. Some of the tactics that allow employers to do this are premium sharing, increasing co-payments, and increasing deductibles. These measures can successfully reduce costs, but they affect the number of enrollments and the value of the investment.

Recent research has found that the primary reason for the decrease in the number of employees enrolling in employer-sponsored health insurance plans is increased cost to employees.

The trend in employer-sponsored health insurance toward increasing healthcare burdens has detrimental effects on employees' health. This in turn affects their productivity and performance. Several studies have demonstrated the value of improving and maintaining employee health. In the long run, if employees are given the means to maintain their health, employers benefit from lower health insurance costs, less absenteeism, and higher-quality work. This also leads to improved customer satisfaction and, therefore, greater business revenues.