Healthcare Economy

Employer-Sponsored Health Insurance on the Way Out?

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A significant portion of employers that currently offer health insurance to their employees are likely to drop that benefit in the next five years. According to a survey by J.D. Power, a division of McGraw-Hill Financial Inc. (NYSE: MHFI), some 15% of employers either definitely or probably will not offer health coverage to employees.

The conclusion the Power draws is that “health plans risk losing group business unless they improve employer satisfaction.” As one might expect, cost is an important factor, but so are program offerings like preventive health programs and wellness initiatives.

In the fully insured segment, the highest rated insurer is Health Care Services Corp. (HCSC), with a score of 741 out of a possible 1,000 points. Cigna Corp. (NYSE: CI) and Kaiser are tied for second with a score of 737, and Aetna Inc. (NYSE: AET) is third at 724.

In the self-insured segment, Cigna is rated highest at 707, with Aetna second at 694, followed by WellPoint Inc. (NYSE: WLP) and UnitedHealth Group Inc. (NYSE: UNH) at 692 and 669, respectively.

On the issue of cost, J.D. Power notes:

Cost satisfaction among employers that indicate they intend to continue sponsoring coverage in the future is 106 points higher than among those that intend to drop coverage (696 vs. 590, respectively). Satisfaction with cost is improving as more consumer driven high-deductible plans are offered to employees, which 82 percent of employers indicate are controlling costs.

Competition from public and private exchanges is set to begin later this year in most states, and that may be another reason that so many employers are seriously considering dropping their existing coverage. Government-sponsored health insurance is expected to cost less and some employers are likely thinking that it is not worth the trouble to offer insurance.