Decline in participation in employer-sponsored health plans

Large companies that employ 1,000 or more workers are experiencing a decline in participation in employer-sponsored health plans because of increases in out-of-pocket costs, the Wall Street Journal reports.

The percentage of employees at large companies who enrolled in employer-sponsored health plans declined from 87.7% to 81% between 1996 and 2004, according to a new survey by the Agency for Healthcare Research and Quality.

The survey polled more than 45,000 offices, plants and other employer sites.

The greatest decline in participation rates occurred at large retailers, with a drop from 83.8% to 67.3%. Although 98% of large employers offer health plans, increases in premiums, deductibles and copayments have led "many workers to forego their employers' insurance," the Journal reports.

Many small businesses have opted not to offer health insurance altogether, according to the Journal.

Another reason for the decline in health plan participation is that "far fewer" married couples enroll in plans at each spouse's company, the Journal reports.

"Premiums and costs have risen high enough that more of these couples pick whichever plan offers the best deal and sign the whole family onto it," according to the Journal.

Families in 2005 paid an average of $226 in monthly premiums -- about 25% of the total premium -- according to the Kaiser Family Foundation.

Linda Blumberg, economist and principal research associate at the Urban Institute, said employees with relatively low salaries are increasingly going to drop health coverage as premiums continue to become more expensive.

Blumberg added that high-deductible plans with health savings accounts, which are being offered by a growing number of companies, might be an unattractive option for many workers who cannot afford to save money in the accounts (Fuhrmans, Wall Street Journal, 8/25).