If the GOP’s proposed American Health Care Act were to pass, companies with 50 or more employees will no longer have to offer health insurance ― the most common source of coverage for people under age 65.
Even if this iteration of a so-called replacement for Obamacare goes nowhere in Congress, the employer health care provision could creep back into a final version. This has barely been mentioned so far in the heated conversation about the Republican plan. But it’s worth examining, because it could cause a sea change in how the nation’s health care delivery system operates, according to industry experts.
Companies began providing workers with health insurance voluntarily after World War II because of the tax advantages. By the mid-1960s, employer-provided health insurance was pretty much universal. It was an affordable benefit for companies, and a valuable recruitment tool. But as health care costs increased and employees began to switch jobs more regularly, the system eroded. Obamacare put a mandate on the practice, requiring companies with 50 or more full-time workers to offer health care to avoid a tax.
The nonpartisan Congressional Budget Office estimates that in 2016, about 155 million people (or about 57 percent of the population under age 65) got health coverage through their job, or a family member’s job. That’s an awful lot of us.
Most people just assume that companies don’t need to be told to give their workers health insurance ― they are motivated by tax incentives and a desire to attract the best talent. And, as many point out, employers were offering health benefits voluntarily long before Obamacare made it a mandate. Why would they change just because Republicans remove the requirement?
Because it costs too much.
Those who study corporate benefits say that health insurance as an employee perk has been on the decline for years, with companies shifting more of the cost onto workers. This trend could accelerate by removing Obamacare’s mandate. The underlying cause is that health care costs have been rising. With higher costs come higher insurance premiums.
The share of Fortune’s top companies that still pay for 100 percent of their employee health care dropped to 9 percent in 2016 from 34 percent in 2001. In most cases, employees are covering more of their health insurance premiums than in previous years. Workers with employer-sponsored health plans now contribute an average of 18 percent of the premium for single coverage, and 29 percent for family coverage, according to a study by the Henry J. Kaiser Family Foundation.