Employer Based Health Care Plans No Longer Dominate In California

Instead of relying on work-based insurance to pay for doctor’s appointments and hospital visits, Californians leaned heavily on government programs for low-income families.

Distributed by Scripps Howard News Service Published Tuesday, November 13, 2012


TOM KISKEN, Ventura County (Calif.) Star

A five-year slide has pushed employers, long the dominant health insurance provider in California, into minority status.

For the first time since at least 2001, and likely much longer, less than half of Californians younger than 65 received coverage through their own or a family member’s employer in 2011.

The news comes from a University of California, Los Angeles study released in late October, just before employers begin to unveil their 2013 coverage offerings to workers with the now routine trends of rising costs or reduced benefits.

“The job-based system has reached its limit,” said Shana Alex Lavarreda, director of health insurance studies at the UCLA Center for Health Policy Research.

The university’s California Health Interview Survey has been gathering data on insurance and other health trends since 2001. That year, 56.4 percent of nonelderly Californians were covered through work, the survey said.

When the economy crashed, people lost their jobs and their insurance. Coverage through work dropped from 55.6 percent of Californians in 2007 to 52.1 percent in 2009.

The trend hasn’t lost any momentum, according to new data based on a survey of 23,000 households in California. In 2011, only 49.7 percent of Californians were covered through work.

Lavarreda said the number is likely a modern state record low. She predicts the trend will continue at least until 2014, when federal health care reform brings new mandates.

Instead of relying on work-based insurance to pay for doctor’s appointments and hospital visits, Californians leaned heavily on government programs for low-income families. In 2011, nearly one in five non-elderly Californians were signed up for Medi-Cal or the Healthy Families program that covers children and is now being folded into Medi-Cal, according to the study.

The people falling into the safety net include more than the unemployed. Many have found jobs but are paid wages that leave them struggling to survive and eligible for government aid.

Culprits for the decline in job-based coverage include a still-struggling economy, layoffs, rising health care costs that push employers against a financial wall, and new jobs that pay less and provide fewer benefits than those lost during the recession.

Federal health care reform is designed to insulate the safety net. Medi-Cal will expand in 2014, meaning 1.5 million more Californians will be eligible. About 3 million Californians will be eligible for subsidized coverage in a new insurance exchange.

Arguments continue on how reform will impact job-based coverage. The law requires that companies with more than 50 employees provide insurance as of 2014 or face penalties of $2,000 per employee.

But the average employer offering contemporary insurance can pay $6,000 or more for each employee, said Edward Fensholt, a vice president with Lockton Benefit Group, a global insurance brokerage based in Kansas City, Mo. Some employers may opt to pull back insurance and pay the fines.

Other observers predict premiums for employers will rise dramatically, pushing more companies to consider pulling insurance.

But Lavarreda said similar reforms in Massachusetts didn’t result in large losses of job-based coverage. She thinks the impacts can’t be predicted.

As recently as five years ago, nearly 56 percent of Californians were covered through work-based insurance. The Affordable Care Act likely won’t bring those days back, Lavarreda said.

“It will probably end up shoring up the system so it doesn’t crumble any further,” she said.