The percentage of firms offering health benefits in 2007 is not significantly different from the percentage in 2006. Nearly all large firms (200 or more workers) offer health benefits while small firms (3-199 workers) are significantly less likely to do so.

Since 2000, the percentage of firms offering health benefits has dropped by nine percentage points. While the year-to-year changes have not been statistically significant, the cumulative effect has been a large and statistically significant change over this seven-year period. This change is driven largely by a decrease in the percentage of small firms (3-199 workers) offering coverage.

• In 2007, 60% of firms offer health benefits, similar to the 61% reported in 2006, but down from 69% in 2000 (Exhibit 2.1). Small firms (3-199 workers) make up about 97% of employers in America, and this decline in the overall offer rate has been driven largely by a drop in the percentage of small firms that offer coverage.
• • Ninety-nine percent of large firms (200 or more workers) offer health benefits in 2007, statistically unchanged from 2006 (Exhibit 2.2). In contrast, only 59% of small firms (3-199 workers) offer health benefits in 2007. This is similar to the offer rate among all small firms in 2006, but represents a drop in the offer rate for small firms from 68% in 2000. For large firms (200 or more workers), the offer rate has not dropped below 98% over the same time period.
    
    
• 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 lower-wage workers, 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 45% of firms with 3 to 9 workers offer coverage, compared with 76% of firms with 10 to 24 workers, and 83% of firms with 25 to 49 workers (Exhibit 2.3). Over 95% of firms with 50 or more employees offer health insurance coverage.
    
    
  • Firms with fewer lower-wage workers (where less than 35% of workers earn $21,000 or less annually) are significantly more likely to offer health insurance than firms with many lower-wage workers (where 35% or more of workers earn $21,000 or less annually). Sixty-seven percent of firms with fewer lower-wage employees offer health benefits, compared with 36% of firms with a higher proportion of lower-wage workers (Exhibit 2.4).
    
    
  • Firms with fewer part-time workers (where less than 35% of employees work part-time) are also significantly more likely to offer coverage to their workers than firms with many part-time workers. Among firms with fewer part-time workers, 71% offer health insurance, compared to 30% of firms with a higher percentage of part-time workers (Exhibit 2.4).
    
    
  • Firms that employ at least some union workers are much more likely than firms without union workers to offer health benefits to their employees. Ninety-nine percent of firms with union workers offer health benefits, whereas 57% of firms that do not have union employees offer health coverage (Exhibit 2.4).
    
    
  • Firms with a relatively small share of younger workers (less than 35% are age 26 or younger) are significantly more likely to offer health benefits than firms with a higher percentage of younger workers (63% vs. 35%) (Exhibit 2.4).
    
    
• Among firms offering health benefits, relatively few offer benefits to their part-time and temporary workers, and a somewhat higher percentage offer them to unmarried same-sex or opposite-sex domestic partners.
• • In 2007, 24% of all firms that offer health benefits offer them to part-time workers. Firms with 200 or more workers are more likely to offer health benefits to part-time employees than firms with 3 to 199 workers (43% vs. 23%) (Exhibit 2.5).
    
    
  • A very small percentage (2%) of firms offering health benefits offer them to temporary workers (Exhibit 2.6).
    
    
  • Over one-third (37%) of firms offering health benefits offer them to unmarried same-sex domestic partners (Exhibit 2.7), and 47% offer them to unmarried opposite-sex domestic partners. Small firms (3-199 workers) are significantly more likely than large firms (200 or more workers) to offer health benefits to opposite-sex domestic partners, at 47% versus 28%.
    

Firms Not Offering Health Benefits

• The survey asks firms that do not offer health benefits about their reasons for not offering, if they have offered or shopped for health insurance in the recent past, and if they think employees prefer higher wages or benefits. Because less than one percent of large firms (200 or more workers) report not offering health benefits, we present the following information in terms of employers with 3 to 199 workers, 59% of whom offer health benefits.
  
  
• Despite a slowing of health insurance cost growth in recent years, the cost of health insurance remains the main reason cited by firms for not offering health benefits.
• • Among firms not offering health benefits, 72% cite high premiums as a “very important” reason for not doing so. Other factors frequently cited by firms as “very important” reasons for not offering coverage include: firm is too small (61%) and employees are covered elsewhere (40%) (Exhibit 2.8).
    
    
• Many non-offering firms have either offered health benefits in the past five years, or shopped for coverage recently.
• • Twenty-three percent of non-offering firms have offered health benefits in the past five years, while 39% have shopped for coverage in the past twelve months. The likelihood of shopping increases from 38% of firms with between 3 and 24 workers, to 72% of firms with 25 to 199 workers (Exhibit 2.9).
    
    
• Over two-thirds of non-offering firms (71%) believe that employees would rather get an additional $2 per hour in the form of higher wages (approximately the cost of health insurance per worker), as opposed to health insurance (Exhibit 2.10).
  
  

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