The End of Employer-Provided Health Insurance: Why It's Good for You and Your Company

Introduction—The End of Employer-Provided Health Insurance

Since 2000, the percentage of Americans covered by employer-provided health insurance has steadily declined. Facing double-digit growth in health insurance premiums, many businesses have either eliminated health benefits or redesigned the plans to include higher deductibles, larger co-payments, and greater premium sharing by employees.

This price pressure has created a paradigm shift in the way small businesses offer employee health benefits—a shift from an employer-driven defined benefit model to an individual-driven defined contribution model. While the transition from employer-provided health insurance to individual health insurance has been gradual since 2000, the post-2014 enhancements to the Individual Market have accelerated this shift.

As a result, the Individual Market is expected to expand from 30 million insureds in 2012 to more than 150 million insureds by 2025 (U.S. Census, 2012; Mandelbaum, 2014).

This book focuses on this shift, which will be led by small businesses. Adopting defined contribution healthcare and individual health insurance plans will allow business owners and their employees to save a combined 20 to 60 percent ($4,000 to $12,000 in savings per family per year) on health insurance. Due to the significant cost advantage for business owners and their employees in the individual market, we predict 60 percent of businesses will eliminate traditional employer-provided health insurance in favor of ...