Hest, Emily
Communications Associate

e hestx008@umn.edu

Pandemic-Era Trends in Employer-Sponsored Health Insurance (ESI), 2019-2020

The COVID-19 pandemic continues to disrupt many patterns of life and work in the United States and internationally, while exacerbating many long-standing concerns regarding health care affordability, access, and utilization as well as rates of health insurance coverage for Americans. In this regard, one area of potential pandemic-related impact to consider is coverage rates for employer-sponsored health insurance (ESI), which remains the largest source of coverage for Americans, with 60.1 million private-sector employees enrolled in ESI in 2020.¹

In anticipation of the release of the 2021 Medical Expenditure Panel Survey Insurance Component (MEPS-IC) data, SHADAC researchers analyzed private-sector ESI estimates from the 2020 MEPS-IC to better contextualize the forthcoming 2021 estimates. Understanding 2020 coverage data will supply a pandemic-era baseline, while providing a critical vantage point from which to observe and interpret trends in ESI composition, affordability, and access in this critical market.

This narrative provides an overview of the 2020 MEPS-IC private-sector ESI estimates, covering firm size, ESI cost, and access. It’s important to note that the overlay of COVID-19 on this data makes it difficult to interpret the cause of certain changes when compared to pre-pandemic estimates. One area where this is evident is within the composition of private-sector employees by employer firm size.

Small firms declined significantly in 2020
Many employers offer ESI to their employees, regardless of the number of individuals they employ. However, while ESI remains the most common source of coverage for Americans, the composition of private sector employees enrolled in ESI shifted significantly from 2019 to 2020. Specifically, the number of employees in small firms (defined here as <50 employees) experienced a 19 percent decline over this timeframe, leaving a greater proportion of medium and large firms (defined here as >50 employees) to drive trends in ESI access to coverage and cost.

With larger firms comprising an increasingly significant portion of the private sector, trends among this subset of firms are driving overall changes between 2020 and 2019. For this reason, it is difficult to analyze changes in ESI estimates from 2020 to 2019, as these changes could be attributed to actual trends in access, cost, and affordability, or they could be directly tied to this shift in composition of employers and employees.

Number of private-sector employees in the United States, by firm size: 2019—2020

Source: SHADAC analysis of the Medical Expenditure Panel Survey—Insurance Component, 2019, 2020.

ESI costs and premiums remain mostly stable
Monitoring costs associated with ESI is essential for understanding health care-related financial burdens for employees. Nationally, 2020 premiums and cost sharing remained relatively stable for employees enrolled in ESI. While premiums for single coverage increased slightly by 2.5 percent ($177), family premiums, employee contributions, and deductibles (for both single and family coverage) remained steady when compared to 2019.

When examined on a state-level, 2020 ESI costs are more varied. Nationally, the average premium for single coverage was $7,149. Certain states exceeded that average in 2020, with Alaska and New York monthly premiums surpassing $8,000 ($8,635 and $8,177 respectively). Meanwhile, Alabama had the lowest premium for single coverage at $6,393. There was also a great deal of variation across states in the size of deductibles. Nationally, the average deducible for single coverage was just under $2,000 in 2020. However, deductibles ranged from an average of $2,500 in Montana to less than $1,500 in Hawaii.

High-deductible health plans (HDHP) represent one common form of ESI. Nationwide, the percent of employees enrolled in a HDHP increased in 2020, rising from 50.5 to 52.9 percent. Moreover, the majority of private-sector employees were enrolled in a HDHP across 36 states in 2020. North Carolina had the highest percentage of HDHP-enrolled employees at 69.5 percent, and Hawaii was at the other end of the spectrum with only 17.6 percent of employees enrolled in HDHPs.

Access to coverage varies by state
Employee access to ESI has three components:

Employee Offer: An employee must work in an establishment that offers coverage.
Employee Eligibility: An employee must meet the criteria established by the employer to be eligible for coverage that is offered.
Employee Take-Up: The employee must decide to enroll in (“take up”) the offer of ESI coverage.

The decision to offer ESI to employees is determined by the employer, with 51.1 percent of private sector firms choosing to offer coverage in 2020 (compared to 47.4 percent in 2019). However, although over half of employers provided optional ESI, not all of their employees were eligible to enroll in that coverage. Meaning, while 86.9 percent of employees worked for an employer offering ESI coverage in 2020, only 80.5 percent were eligible for that coverage; eligibility could be based on a minimum number of hours worked per pay period or a minimum length of service with an employer, for example. Among employees eligible for ESI, overall enrollment declined in 2020, dropping from 71.9 percent to 70.8 percent—a difference of 1.745 million employees.

ESI access also varied across states in 2020. In Hawaii, Tennessee, Massachusetts, Illinois, Pennsylvania, New Jersey, and the District of Columbia (D.C.), more than 90 percent of employees worked at a firm that offered ESI. Meanwhile, less than 75 percent of Montana and Wyoming employees worked for an employer that offered ESI (73.8 percent and 70.6 percent, respectively).

It’s important to note that trends in access are particularly difficult to interpret due to the sharp decline in employees who work in firms with <50 employees, as small firms are much less likely to offer coverage. 

To revisit 2019 ESI findings from SHADAC, see the following products:

• Printable version of 2019 ESI Report Narrative
• Companion Blog and Infographic highlighting key findings at the national level regarding ESI coverage affordability and access
• Two-Page Profiles on ESI trends for each state
• 50-State Interactive Map showing levels of, and changes in, average annual premiums for single and family coverage in 2019, with links to state profile pages
• 50-State Comparison Tables including 2015-2019 ESI data

Notes and Sources
Hawaii has a broad employer mandate that preceded the ACA. The Hawaii Prepaid Health Care Act, enacted in 1974, requires private employers to provide health insurance for employees who work at least 20 hours (some exceptions apply).

High-deductible health plans (HDHP) are defined as plans that meet the minimum deductible amount required for Health Savings Account (HSA) eligibility (e.g., $1,400 for an individual and $2,800 for a family in 2020).

The labor market changed significantly between 2019 and 2020 with a dramatic reduction in small firm employment. It is difficult to determine whether 2020 changes in ESI were driven by this change in the labor force or reflect actual changes in ESI access and cost. 

Data are from the 2019–2020 Medical Expenditure Panel Survey–Insurance Component (MEPS-IC), produced by the Agency for Healthcare Research and Quality (AHRQ), and are available on SHADAC’s State Health Compare web tool at statehealthcompare.shadac.org.

¹ State Health Access Data Assistance Center. (n.d.). Health Insurance Coverage Type (2020)*  http://statehealthcompare.shadac.org/bar/279/health-insurance-coverage-type-2020-by-total#0/1/5,4,1,10,86,9,8,6/32/325