Oct 08, 2020 - 10:00am

Decoding the Data-Driven Distortion on Employer-Sponsored Insurance


Vice President, Health Policy, U.S. Chamber of Commerce

Senior Economist, U.S Chamber of Commerce

The United States has faced an unprecedented amount of disruption due to the COVID-19 pandemic, particularly for U.S. businesses and millions of employees across the country. At a time when the health of America’s workforce has never been more important, it is imperative for policymakers to strengthen – rather than destabilize – employer-sponsored insurance (ESI), the health coverage that American workers and their families depend on as part of the backbone of the nation’s health care system.

We must look beyond the faulty recent reports and commentary that equates COVID-related job losses directly to millions of Americans losing ESI coverage. As the Urban Institute reported, of the 48 million people who will experience job loss due to COVID-19, 32 percent of those will switch to another source of ESI through a family member. Researchers estimate that approximately 3.5 million (equal to 7 percent) will become uninsured. While any loss of coverage is disruptive for families, this percentage is far lower than the 21 percent estimated coverage loss suggested by groups trying to use the pandemic to showcase the “supposed fragility” of ESI and push for a government-run system. In fact, between March 31 and June 30, the ESI enrollment for the largest publicly traded health plans representing over 83 million lives, approximately half the ESI market, has declined by 800,000 or 1% according to their second quarter filings with the securities and exchange commission.  Whether it is a 7 percent decline or smaller, this dip certainly does not suggest that employment-based coverage is unreliable – instead, it is demonstrating remarkable resilience in the face of one of the largest economic declines since the great depression.

The analysis from Urban also fails to account for two important factors, which skews its analysis. First, the labor market is rapidly recovering. The economy has added more than 10.6 million jobs in the last 4 months. That rapid recovery will continue absent a resurgence of the virus. Many of those going back to work will regain ESI. Secondly, job losses are heavily concentrated in the service sector. Lost service sector jobs account for 82 percent of all jobs lost since February. These jobs often lack benefits like ESI. Failing to account for this fact inflates the pool of those estimated to have lost ESI.

At a time when they need it the most, ESI is a vital benefit for America’s workforce. That’s why the U.S. Chamber of Commerce recently launched Protecting Americans’ Coverage Together (PACT). As many families are living paycheck to paycheck, the PACT Campaign advocates for solutions that will build on the comprehensive and flexible coverage on which American employees depend for their health and financial security.

Advancing Medicare buy-in and public option proposals in the midst of one of the most challenging public health emergencies would amount to a massive disruption to one of the most stable, reliable components of our health system. Under a Medicare buy-in plan, the market disruption caused by enrollees prematurely shifting to Medicare coverage would increase premiums for small businesses and those purchasing coverage on their own between 2 and 10 percent and do little to close the coverage gaps that resulted from COVID-19. Out-of-pocket spending for those remaining in the individual market is estimated to increase as much as 9.5 percent.

Those pushing for a public option also fail to account for significant reduction in consumer choice. For example, researchers estimate that two million people insured through the individual market could lose access to private plans over 10 years. 

We urge policymakers to focus on productive solutions based on sound data that work for employees and employers alike. By advancing legislation aimed at strengthening the current ESI system and providing funding support for employees who lost their coverage due to COVID-19, Congress can help safeguard the system that continues to be the driving force for health care innovation and reliability across the country. 

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About the Authors

About the Author

Vice President, Health Policy, U.S. Chamber of Commerce

Katie W. Mahoney is vice president of health policy at the U.S. Chamber of Commerce.

About the Author

Curtis Dubay Headshot _ IW
Senior Economist, U.S Chamber of Commerce

Curtis Dubay is Senior Economist, Economic Policy Division at the U.S. Chamber of Commerce. He heads the Chamber’s research on the U.S. and global economies.