When Ken Fasola was working at Humana and UnitedHealth Group in the 1990s and 2000s, the industry saw individual insurance products as "the bottom end of the food chain."
"Now it's the other end of the food chain," said Fasola, CEO of the Dallas-based individual insurance exchange and brokerage HealthMarkets.
While the commercial group market may remain large, with opportunities especially in self-funding products, it is nonetheless shrinking, as the subsidized individual market, Medicare Advantage and Medicaid managed care become the growth areas.
Indeed, fewer and fewer Americans are getting their health insurance at work, bringing changes to commercial health insurance that may not have been anticipated a decade ago.
Less than 60 percent of Americans, in fact, receive health insurance through their employer, down from 69.7 percent just 10 years ago, according to new research by the State Health Access Data Assistance Center (SHADAC) and the Robert Wood Johnson Foundation.
A new comprehensive, state-by-state analysis by SHADAC puts the trend into even more focus, and found that both employers and employees are migrating away from job-based insurance -- to the point where less than 50 percent of workers are getting health insurance through their jobs.
Nationally, the percentage of private-sector employers offering health insurance fell from 55.7 percent in 2005 to 50.0 percent in 2013. The percentage of workers who accepted an offer of employer-sponsored coverage, meanwhile, dropped from 79.7 percent in 2005 to 75.3 percent in 2013, according to SHADAC.
Although the country as a whole did not see huge changes in the percentage of employers offering ESI in the pre-recession period, 8 states had significant changes in how many employers offer coverage, ranging from an increase of 5.0 percentage points in Arkansas to a decrease of 4.9 percentage points in Maryland.
Post-recession, there were decreases in employer offers of ESI nationally -- declining on average from 55.7 percent to 5 percent. In 34 states, there were marked decreases in employers offering coverage, such as a 10.5 percent point decline in New Jersey.
"Before the recession the overall trends were relatively stable," said Lynn Blewett, director of SHADAC, housed at the University of Minnesota. "After the recession, all indicators were down. The percentage of firms offering insurance declined, and even if insurance was offered through a job, fewer workers accepted it."
Changes in part-time and full-time workforces are having an impact on commercial health insurance markets -- accelerating the trends toward individual plans.
In 2004, just under 80 percent of the American workforce was employed full-time, with 20.1 percent in part-time jobs. By 2012, post-recession, 77.2 percent of the workforce was full-time, and 22.8 percent working part-time.
Post-recession, eligibility for ESI decreased a fair amount among part-time workers, from 33.8 percent to 30.8 percent, although it increased among full-time workers, from 88.3 to 89.0 percent. The long-term decline in ESI, though, has happened in both large and small firms, if more markedly for small employers. Prior to the recession, employer coverage was fairly stable, but more workers were declining their offers of insurance.
Although the Affordable Care Act includes the controversial mandate for many mid-size and large employers to offer coverage -- keeping what some critics see as a large market distortion -- amending the requirement or even changing the preferential tax treatment of ESI could gain bipartisan support in coming the years. And in any case, commercial group insurance is not likely to grow, between retiring baby boomers, an increase in freelance and part-time work and the rise of the subsidized individual market.
"Most Americans still get health insurance through their jobs, but this has been declining for more than a decade," said Katherine Hempstead, PhD, who directs coverage issues at the Robert Wood Johnson Foundation. "It will be interesting to see how that trend evolves now that there are more opportunities for coverage through the individual market and Medicaid."