Employer-Sponsored Insurance Provides Nation with 5:1 ROI
Plans sponsors periodically look at the return on investment (ROI) for their benefit programs. What about the ROI of employer-sponsored health insurance in general – which provides more than half of all Americans with their health coverage? The American Benefits Council, which worked tirelessly to overturn the ACA’s Cadillac tax, has recently updated their ROI calculation. Together with some new poll results about voters’ view of their health benefits, the ROI update provides good reason to feel good about employer-sponsored health insurance – and bolsters the argument that it has an important place in the US healthcare system.
What is the ROI?
According to the Joint Committee on Taxation’s Estimates of Federal Tax Expenditures For Fiscal Years 2019-2023, there was $152.5 billion in “forgone revenue” in 2019 because workers do not pay income tax on their employer-provided health coverage. Meanwhile, the Bureau of Economic Analysis’ National Income and Product Accounts Table 6.11 (Employer Contributions for Employee Pension and Insurance Funds by Industry and by Type) shows that employers spent $813.9 billion to provide health coverage the same year. The American Benefits Council did the math: divide $813.9 billion by $152.5 billion, and you find that each dollar of forgone federal revenue yielded approximately $5.34 in benefits for covered employees and their families. Jim Klein, President of the Council asks, “What other federal program can demonstrate the same bang for the buck?”
Do American workers value employer based coverage?
Of course, if Americans didn’t value their employer health plan coverage, that would take the shine off even a 5:1 ROI. But they do value it. The Alliance to Fight for Health Care, a broad-based coalition comprising businesses, patient advocates, employer organizations, unions, healthcare companies, consumer groups and other stakeholders that support employer-provided health coverage, released the results of a new poll on the U.S. healthcare system. Most respondents in an employer-sponsored plan – 83% -- are satisfied with their coverage. While a majority of all respondents give the U.S. healthcare system in general a positive rating (55% say it’s good or excellent), they are – rightfully -- concerned about cost: 65% have a negative view of healthcare affordability in the US. That sounds like a call for change, but it’s important to note that the voters polled are averse to major disruptive changes in the healthcare system. Nearly three-fourths (70%) would prefer to build on the current system, with businesses and government working together to offer a variety of coverage options
Consumer concerns over affordability continue to fuel the health policy debate in Washington D.C. The employer voice is important – and membership in an employer advocacy group in Washington D.C. is an excellent way to stay informed and be heard. In addition to the American Benefits Council and Alliance to Fight for Health Care, Business Group on Health and The ERISA Industry Committee are all actively representing employers in Washington. Your support helps make a difference.