Although employment-based coverage continues to be the go-to source of health insurance for working Americans, fewer small employers are offering benefits than in the past.
“If health insurance premiums rise faster than wages and general inflation, small employers are likely to face intensified financial strain, which could accelerate the erosion of health plan sponsorship among firms with fewer than 100 workers,” says Paul Fronstin, Ph.D., director of health benefits research for the Employee Benefit Research Institute.
A new report from EBRI examines long-term trends in employer offers of health benefits and worker eligibility for coverage. Among the key findings:
- Employer sponsorship. The percentage of employers offering health benefits ebbed and flowed from 1996-2024. After a near-record low of 46.3% in 2023, the percentage of employers offering health benefits increased slightly to 49%. Declines have been concentrated among small employers, while large employer sponsorship has remained stable.
- Eligibility rates. Despite small-employer sponsorship declines, worker eligibility for health benefits has stayed mostly constant since 1996, ranging from 75%-81%. In 2024, 80% of private-sector workers were eligible for health benefits, reflecting the dominance of large employers, which employ about two-thirds of all workers.
- Coverage trends. The percentage of the non-elderly population with employment-based health benefits was at or near 70% from 1970-89. By 2024, 61% of the non-elderly population had employment-based health coverage. Employment-based coverage remains the most common source of health coverage among the non-elderly population.
- Labor market shifts. The percentage of workers employed full time rose from 63% in 2014 to 69% in 2024. After a long-term decline, the share of firms with mostly low-wage work forces ticked up from 15% in 2023 to 21% in 2024. The share of workers in large firms increased slightly, from 65% in 2013 to 67% in 2024.
The rising cost of health care is expected to remain a concern for all workers, regardless of their employer’s size.
“Large employers, while more resilient, may respond by shifting costs to employees through higher deductibles, coinsurance or restricted networks,” Fronstin says. “That could preserve offer rates but reduce the value of coverage, potentially lowering take-up. For workers, the impact could be significant, meaning higher out-of-pocket costs, greater reliance on public programs and increased financial insecurity tied to health care expenses.”
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