Trends In Employer-Sponsored Health Insurance

The resonant image of the enfeebled giant has been a favoriteof storytellers since Goliath made his claim to fame in theBook of Samuel. No surprise, then, that the putative demiseof the embattled employer-sponsored health insurance systemhas become an irresistible story line for critics Left and Rightsince enrollment growth began to wobble in the 1980s. The plothas thickened with the retreat of managed care. The growth ofcosts has not been controlled, and employers and insurers seemto have lost their appetite for fighting back. Instead, theyare thinning benefits and offloading risk onto patients. Thenumber of uninsured Americans grew by almost 1.3 million from2004 to 2005, according to the Census Bureau’s March 2006Current Population Survey (CPS), and the number of firms offeringretiree coverage has been dropping by more than a percentagepoint per year since 1997.

But is the sky really falling? There is room for doubt. A closerlook at the March CPS data, for example, reveals that the numberof people with workplace coverage actually grew by more thanhalf a million in 2005, while the number of people with individuallypurchased insurance—lately the fashionable alternativeto employer-sponsored coverage—declined by almost as much.As James Robinson points out in the lead paper in this specialissue of Health Affairs, the profitability of the commercialinsurance industry has soared in the past few years, even asprivate enrollment slipped by a tiny fraction. And althoughcost growth remains a formidable challenge, it also representsunquenchable market demand that has brought constantly increasingrevenues to providers and suppliers in the nation’s largestsingle economic sector, as well as access for patients—althoughit is shamefully inequitable—to an unprecedented rangeof improved, life-changing treatments. If this is a crisis,things could be worse.

What matters chiefly, though, is not how the current ambiguousstate of affairs is perceived by commentators and opinion makers.The important thing is to try to understand what is really goingon here. To this end, the journal is pleased to present thefollowing group of papers. Robinson usefully surveys the scenefrom the point of view of the insurance industry, relating trendsin employment-based coverage to the evolution of private plans’role in Medicare and Medicaid. Helen Darling, Marsha Gold, andRobert Hurley offer responses to his analysis. Next, PatriciaKeenan and colleagues drill down into the coverage numbers toshow an incipient tiering pattern in private coverage by ageand income that has potentially troubling implications. ThomasBuchmueller and colleagues round out this first section of paperswith a closer look at retiree coverage trends.

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Trends In Employer-Sponsored Health Insurance