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CCH® BENEFITS — 11/02/06

Panelists Examine Employer Role In Health Coverage Declines

Recent Census Bureau figures tie the increase in the number of uninsured to declines in employer-sponsored coverage, and an October 19 briefing by the Alliance for Health Reform and the Kaiser Family Foundation further explored the employer connection to the uninsured.

The briefing, “46.6 Million and Counting: A Look Behind the Number of Uninsured Americans,” featured panelists Bo Garrett, senior researcher at The Health Policy Center of the Urban Institute; John Holahan; director of the Urban Institute’s Health Policy Center; Jeanne Lambrew, Center for American Progress and associate professor at George Washington University; and Chip Kahn, president of the Federation of American Hospitals.

According to Mr. Holahan, the key findings from the past year are that the number of uninsured increased by 1.3 million. Adults accounted for 1 million of the increase in the past year; 1.1 million were from low-income families.

“The uninsured grew in 2005, primarily because of the continued decline in employer-sponsored insurance, which has declined throughout this decade, but at a little slower rate in the last couple of years, but nonetheless continue to decline,” said Mr. Holahan.

“I think it’s likely that declines in employer-sponsored insurance will continue,” Mr. Holahan stated. The Kaiser HRET survey that was released in the last few weeks showed, once again, that premiums were growing faster than wages by about twofold, also faster than the underlying inflation rate. We’re moving toward places of work where we are less likely to have employer coverage and more likely to be uninsured and away from those larger firms where the rates of employer-sponsored insurance are greater.”

Mr. Garrett noted that employer-sponsored health insurance fell from 81% in 2001 to 77% in 2005: “The main reason was that fewer employees worked for businesses sponsoring health benefits. These declines were deepest among poor and near-poor employees, employees in small firms, and employees younger than age 35. The last point is based on projections that health care costs and therefore premiums are likely to continue to grow faster than family incomes. If that comes to pass, we can expect further declines in job-based coverage and a continuation of the trends that we’ve provided here.”

Public Policy Needed

Mr. Kahn noted that public policy change is necessary: “I think we can conclude now that even with some upticks over time of employer-based coverage, we’re not going to solve the problem of those who are uninsured by the economy moving employer coverage. It just isn’t going to happen.

“I think the losses we’ve seen are in an obvious place. They’re with the people or the businesses with the least disposable income, people who are low-income, people who are younger, and people who are small employers or work for small employers. So that is no surprise, but I think it’s an important insight when we think about the policies that we might implement to solve the problems.”

In response to the question: Does it require public policy?, Mr. Kahn said, “I conclude from looking at the data, looking at the trends that public policy is necessary. This is not going to solve itself, no matter what we hope or pray.

“When we seek solutions, we ought to go where the ducks are. It’s really clear low-income people, small employers, it all ties together. Those are the people who are both more uninsured than other Americans, and more likely to become uninsured in the future. Policies ought to be designed to address their issues, which means that they lack disposable income, so they need greater subsidization to purchase coverage and get care.”

Mr. Kahn said, “At least from my standpoint, 85% of Americans, give or take a percentage, have coverage, and we ought to design a policy that focuses on the 15% and a policy that will do the best we can to sustain those who have coverage now with it being paid for wherever the money is coming from to pay for it, rather than rebuilding the whole house.”

Ms. Lambrew concluded “we’re going to have to have major comprehensive health reform to really get at this issue of the uninsured, nothing short of that will really work.”

However, Ms. Lambrew also said that “the policy disagreements are not as big as people think. There is a lot of shared agreement on how we would structure the subsidies to make it progressive so that low income people could afford health insurance. I think most of us agree that we should have some shared responsibility in how we all pitch in to pay for such a system, and I think that we all agree that it is a priority to make sure that everybody has some sort of health insurance.”

Ms. Lambrew also noted that both businesses and the states are moving toward a shared idea of comprehensive reform: “We have seen this with certain CEOs beginning to stand up and stand out on this issue, as profits are now being eclipsed by health insurance benefits. I think we’ll see more support and leadership in the business community for this. We’ve seen state governors begin to reach out on both sides of the aisle. Governor Romney of Massachusetts clearly embraces this as an issue. We’ve seen in Maine, in Illinois, and in other states real efforts to try to address this issue. It no longer is the political pariah that it once was.”

A full transcript of the October 19 brief is available at

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.

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