Although nearly all large firms (200 or more workers) offer health benefits, all small firms (3-199 workers) are only about half as likely as all large firms to offer coverage (Exhibit 2.2).

Annual changes in the offer rate over the last several years have been small; however, the cumulative result is a statistically significant drop in the percentage of firms offering health benefits since 2001. This change is driven primarily by a decrease of five percent in the number of all small firms (3-199 workers) offering coverage over this time period. The decline in coverage is likely a response to four consecutive years of double-digit premium growth, combined with a slow job market.

• Sixty-three percent of all small firms (3-199 workers) offer health insurance in 2004, down from 68% in 2001 (p<.10), but statistically unchanged from last year. The offer rate for all firms has fallen from 68% in 2001 to 63% over the same period (p<.10). Because there are so many more small firms than large firms, the offering practices of small firms dominate the all-firm rate (Exhibit 2.2).
• The likelihood that a firm offers health benefits to its workers varies considerably with the firm’s characteristics, such as firm size, the proportion of part-time workers in the firm, and whether workers are unionized.
  • The smallest firms are least likely to offer health insurance. Only 52% of firms with 3-9 workers offer coverage, compared to 74% of firms with 10-24 workers and 87% of firms with 25-49 workers. Nearly all firms with 50 or more employees offer health insurance coverage (Exhibit 2.2).
  • Firms with many part-time workers—where 35% or more of employees work parttime —are also less likely to offer coverage to their workers than firms with fewer part-time employees. Among firms with many part-time workers, only 42% offer health insurance, compared to 68% of firms with a lower percentage of part-time workers (Exhibit 2.3).
  • Firms that employ union workers are significantly more likely than firms without union workers to offer health benefits to their employees. Ninety-six percent of firms with union workers offer health benefits, whereas only 61% of firms that do not have union employees offer health coverage (Exhibit 2.3).
• Among firms offering health benefits, few offer benefits to their part-time and temporary workers. The number of firms offering health benefits to part-time and temporary workers is similar to last year.
  • In 2004, 23% of all firms offer health benefits to part-time workers. Larger firms are more likely than smaller firms to do so. Only 20% of firms with 3-24 workers offer benefits to part-time workers, compared to 59% of jumbo firms (5,000 or more workers) (Exhibit 2.5).
  • Regardless of firm size, very few firms overall (4%) offer health benefits to temporary workers. Less than four percent of firms with fewer than 200 workers and only seven percent of firms with 5,000 or more workers offer benefits to their temporary employees in 2004 (Exhibit 2.6).
• Fourteen percent of all firms offer health benefits to same-sex couples, and twelve percent offer health benefits to unmarried heterosexual couples. Jumbo firms (5,000 or more workers) are more likely to offer benefits to same-sex couples than smaller firms. There are no significant differences by firm size in firms’ likelihood of offering benefits to unmarried heterosexual couples (Exhibit 2.8).³

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