Group health clients in 2025? Maybe a few

A new forecast from two industry bodies suggests that as few as one in four employers will offer health insurance in a decade.

Catastrophe & Flood


Producers banking on group health clients to carry them through the uncertainties of health reform may need a new strategy. According to an employer survey from Towers Watson and the National Business Group on Health, as many as three in four employers expressed uncertainty about providing health benefits to their workers in 2024.

That’s a record low since the two industry bodies began surveying employers nearly 20 years ago.

“That is very much a function of the uncertainty swirling around in the healthcare landscape right now,” said Randall Abbott, senior healthcare consultant at benefits advisory firm Towers Watson.

The numbers stand in direct contrast to the 95% of employers who said subsidizing health insurance for active employees would continue to be an important focus of compensation for the next few years. Abbott noted that the uncertain effects of the Affordable Care Act are likely why employers feel so differently when thinking long-term.

“It’s the highest degree of uncertainty we’ve seen. It has been exacerbated by the ACA,” he said.

However, it’s not just the controversial health reform model that’s driving employer sentiment. Towers Watson noted that while 40% of employers cited the ACA as the number one reason for their uncertainty, a full 32% of respondents cited business performance and the economy as the top drivers.

There’s also a growing sentiment that providing for healthcare is an individual’s responsibility—not an employer’s.

Scott Leavitt, owner of Scott Leavitt Insurance in Boise, Idaho, said he is already starting to feel the effects of this apparent perfect storm in his small group client base.

“Some of the companies I’ve worked with have already dropped benefits because of the exchanges. Some even say ‘Am I hurting my employees by offering insurance?’” Leavitt said. “[Dropping coverage] saves money for the company and, in some cases, gives workers better benefits for a cheaper price.”

Leavitt noted that he “really want[s] the employer system to stick around,” but isn’t feeling too hopeful.
“I’m usually an optimist in this industry, but it’s not looking too good anymore,” he said.

Not all brokers are ready to believe the survey reflects group health’s swan song, however. In Keenan offices in California, the state’s largest privately held insurance brokerage actually entered the small group health market for the first time.

“We see this market as profitable. At least in some niches, we still think the employers are going to continue to offer coverage,” said Keenan’s chief strategy officer, Henry Loubet. “We think there will definitely be some movement to employee responsibility, and that employers will look for creative alternatives to the existing systems, but we don’t see that there’s going to be that kind of a dramatic shift.”

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