A surprising number of working Americans cannot get health insurance even though they work for companies that offer health benefits. According to a new study published in Health Affairs (July/August 2001), employer policies such as high employee premium contributions, waiting periods for new employees, and exclusions for part-time employees deter or prevent workers from signing up for health coverage. Removing barriers to participation, the study finds, could significantly increase coverage rates for working families.
In Embraceable You: How Employers Influence Health Plan Enrollment, analysts Jon Gabel, Jeremy Pickreign, and Heidi Whitmore of the Health Research and Educational Trust, and Cathy Schoen of The Commonwealth Fund find that most new employees face a waiting time before they become eligible for their workplace health plan. Only one of three (31%) has coverage that starts immediately. Eleven percent of employees at companies offering health plans face waiting times of four months or more. Those working for small or midsize firms and low-wage businesses are most likely to experience such waiting times.
Restrictions on part-time worker eligibility also limit participation. Only two of five (41%) part-time workers are eligible to join a health plan that is available to their full-time coworkers. Firms with fewer than 1,000 workers are the least likely to cover part-time workers: about one of four part-timers in small (27%) and medium-size (25%) firms is eligible for health benefits, compared with over half (58%) of part-time workers in large firms. The study further finds that requiring large employee contributions for premiums discourages participation, particularly in low-wage firms. Take-up rates fall sharply as employee premium shares increase, with the steepest drop-off occurring in firms with the highest concentration of low-wage employees.
The authors say that employers could improve employee coverage rates by eliminating or shortening waiting periods for new workers; allowing part-time workers to participate in health plans or reducing the number of hours worked that are required for eligibility; and reducing the plan costs borne by employees.
Facts and Figures
- At a monthly premium contribution of $50, 72 percent of low-wage firm employees take up coverage; at a monthly contribution of $100, the rate falls to 55 percent.
- Approximately one of four employees working for firms that offer a health plan is ineligible to participate, typically because he or she is a part-time or new employee.
- One strategy for encouraging low-wage workers to participate in the company health plan is to offer premiums or deductibles based on income. But among firms offering coverage in 1999, fewer than 1 percent of employees worked for a company that tied premiums and deductibles to worker earnings.