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The Future of Employment-Based Health Benefits: Have Employers Reached a Tipping Point?

20 Pages Posted: 14 Dec 2007  

Paul Fronstin

Employee Benefit Research Institute (EBRI)


This paper examines the notion that employers have reached a tipping point over health costs and will cease offering health care benefits to their workers. In the end, an evaluation of recent data does not suggest that the end of employment-based health benefits is upon us. However, the message from some associations representing employers is that the existing employment-based system must be reformed because the status quo is unsustainable. Some individual employers, including leaders in the field, appear to share this new vision. However, many individual employers believe that there is a business case for offering health benefits to their workers, and they continue to invest substantial amounts of money in their health programs. They also tend to agree that if one major employer were to drop health benefits, others would follow. And they tend to agree that public policy changes, such as the erosion or elimination of ERISA (federal) pre-emption of state insurance regulation, could mean the end of voluntary employment-based health benefits.

The first section of this report examines recent trends in health benefits. It then discusses whether employers have reached a tipping point with health benefits. This is followed by a discussion of what is driving employers to a tipping point with respect to retiree health benefits.

Keywords: Employment-based benefits, Health care access, Health care costs, Health care reform, Health insurance coverage, Retiree health benefits

JEL Classification: I1, I18, J3, J32

Suggested Citation

Fronstin, Paul, The Future of Employment-Based Health Benefits: Have Employers Reached a Tipping Point?. EBRI Issue Brief, No. 312, December 2007. Available at SSRN:

Paul Fronstin (Contact Author)

Employee Benefit Research Institute (EBRI) ( email )

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