The arrival of the Affordable Care Act in 2010 marked the first appearance in the marketplace since World War II of a viable alternative to employer-provided health insurance. Implicit in the ACA’s design is the notion that someday the various health insurance exchanges, led by a national exchange, could collectively cover more people than employers cover today. Theoretically, it has the potential to make employer-provided health insurance eventually go, like the dodo bird, extinct.

Nobody expects that to happen soon if at all. To begin with, research by the Urban Institute and others, corroborated by much anecdotal evidence (see article below), confirms that employer-provided insurance is not going away in the short run. But since employer-provided health insurance is a consumer product, the attitude of its consumers—i.e., today’s employees—towards it will eventually determine its fate. So that attitude needs to be studied.

The Employee Benefits Research Institute (EBRI) recently reported the results of an annualized (2012-2015) study of employee attitudes towards their employer-provided health insurance. In general the findings confirmed that employees today are nowhere near ready to see their employer-provided insurance go away—no surprise there. But neither are they beginning to look at exchange-based coverage as a desirable alternative to their employer-provided plans. In fact, the numbers over the last four years suggest that even  more of them prefer what they have at work in contrast to what  they  might get on an exchange.

This is not to say that employees are becoming more satisfied with their health benefits. In fact, while two of three (66%) said they were satisfied with their health benefits in 2015, nearly three of four (74%) said that in 2013. And while a small (14%) but steady number said they would take lower pay in return for better health benefits, a somewhat larger (20%) and growing (10% in 2012) number said they would take lower health benefits in return for higher pay.

The more important data has to do with what employees would do if their employer-based health care began to cost them significantly more than it already does. When asked what they would do if their benefits were to become taxable to them as income, 50% said they would maintain their current level of coverage. Importantly, this number is trending up; in 2012 it was 40% and in 2014 it was 47%. And, when you combine that group with those who said they would opt for a less costly but still employer-provided plan, the 2015 number goes up to 79%; in 2012 it was 69% and in 2014 it was 73%.

By contrast, the number who said either they would shop for insurance directly from an insurer or drop their insurance altogether went down correspondingly: in 2015 it was 21%; in 2012 it was 31% and 2014 it was 27%.

A clue to why employees seem willing to cling to their employer plans may be that their confidence in their employer’s ability to pick the best plan for them is greater than their confidence in their own ability to do the same.

When asked to identify their confidence level in their employer (or their union) to select the best available plan for them, 88% of employees in 2015 were either Extremely Confident, Very Confident or Somewhat Confident. That number was trending higher (82% in 2013 and 85% in 2014); further, the figure for those who were Not Too Confident or Not at All Confident trended correspondingly lower.

Then, when  asked how confident they were in their own ability  to pick the best plans for  themselves if their  employer stopped offering healthcare coverage, more than four of five (83%) responded “Extremely,” “Very” or “Somewhat.” That number was trending upward from 78% in 2013 and 80% in 2014.

So while most employees were becoming more confident in their ability to make a good benefit choice if they had to, they are more confident in their employer (by about 5%) to do it for them.

Further data from the survey confirms that employees prefer greater choice in selecting plans, but are not confident that any “objective” system for self-selecting the best coverage for them is out there yet, which suggests that they have an appreciation for the fact that the selection process is not, and probably cannot be, a simple one.

That fact, laid up against their apparent growing confidence in their ability to figure out the health insurance puzzle for themselves, suggests a big picture in broad strokes: Employees are slowly beginning to think they could figure out the health insurance puzzle for themselves if they had to, but they are not ready—yet—to cut the cord with their employers.  

Source: Employee Benefits  Research Institute Notes February 2015