Return on Investment for Offering Employer Sponsored Insurance


June 29, 2022


Executive Summary

In support of the Protecting Americans’ Coverage Together (PACT) campaign, the U.S. Chamber of Commerce commissioned Avalere Health to estimate the return on investment (ROI) employer-sponsored health insurance (ESI) provides employers with 100 or more employees.

Avalere estimates that ESI provides benefits that equal or exceed costs for three-quarters of industries in 2022, rising to nine-tenths of industries in 2026. According to Avalere’s analysis, ESI will provide an estimated 47% ROI to employers with 100 or more employees in 2022 and a 52% return in 2026. Key drivers of ROI include $275.6B from improved productivity in 2022 and $346.6B in 2026, $101B from a reduction in direct medical costs in 2022 and $108B in 2026, and $119.2B from tax benefits in 2022 and $139.7B in 2026.

  • 47%
    estimated ROI to employers with 100 or more employees in 2022
  • 52%
    estimated ROI to employers with 100 or more employees in 2026

Return on Investment

Avalere’s analysis breaks down the particular benefits that accrue to employers from providing ESI. Avalere attributes the direct financial return to lower direct medical costs, increased productivity, lower recruitment costs, stronger retention, lower short- and long-term disability costs, as well as tax benefits. Improved productivity represents the largest share of these, returning more than $275 billion, but all provide an important benefit to employers. The return in these each of these areas is expected to grow over the next five years as well.

Greater Investment, Greater Return

A theme of the analysis is that employers that offer higher quality coverage and higher wages can expect to see a higher return on their ESI program. As Avalere looked across industries, its analysis found that industries where firms generally made greater investments in ESI, such as plans with wellness programs, tended to result in high ROI.

As an example, Avalere examined the return on investment for manufacturing companies providing employer sponsored insurance. The report finds that American manufacturers with 100 employees or more will see a positive 42% return on their ESI investment in 2022.

What They're Saying

“Employee-sponsored health insurance is a win-win for employers and employees,” said Katie Mahoney, Vice President of Health Policy at the U.S. Chamber of Commerce. “We know employees place a high value on quality health insurance in the workplace, and now we have more evidence that employers benefit significantly from investing in these programs as well. Employer-provided coverage is the backbone of the American health care system, and this report reinforces that any reforms should build off this model that is good for workers and companies alike.”

“Improving productivity and wellness make America more competitive and prosperous,” said Joel White, President of the Council for Affordable Health Coverage. “While employers offer health coverage to improve the health and welfare of their employees, employees and their families benefit significantly. This study shows that Congress and the Administration must work to expand job-based coverage, not weaken it.

“Manufacturers are in the business of innovating and delivering best-in-class products to their customers,” said Robyn Boerstling, Vice President, Infrastructure, Innovation and Human Resources Policy at the National Association of Manufacturers. “That philosophy extends to the benefits provided to their employees, and this report further validates that offering comprehensive and innovative health benefits is not only the right thing to do but also critical to attracting and retaining the best talent. We are proud that approximately 99% of NAM member companies offer health benefits to employees, and working Americans understand the value and competitiveness of employer-sponsored health care.” 

“As an employer, knowing who we are caring for and the communities they come from gives us the advantage of providing access to quality, affordable care to our team and their families,” said Vermeer Corporation. “It is an incredibly important part of how we care for our people.”

About PACT

PACT members include the U.S. Chamber of Commerce, Business Roundtable, The National Association of Manufacturers, Council for Affordable Health Coverage, and Vermeer Corporation, represent leading employer voices focused on strengthening the ESI system and protecting the coverage and benefits that American families depend on for their health.


Return on Investment for Offering Employer Sponsored Insurance