The Patient Protection and Affordable Care Act won't cause a significant change in the number of Americans with employer-sponsored health insurance coverage, according to a Health Affairs analysis conducted by
Various microsimulation analyses from the Urban Institute, the RAND Corp., the Lewin Group and the CMS Office of the Actuary estimate the portion of Americans with employer-sponsored health insurance will experience a decline ranging from 1.8 percentage points to 2.9 percentage points.
The PPACA's potential impact on employer-sponsored coverage depends on several major factors, according to the analysts. First, nearly two-thirds of private-sector workers are employed by firms with more than 100 employees, which means the healthcare reform law's effect depends mostly on the decisions made my large employers and their employees.
Second, administrative economies of scale and the benefits of risk pooling increase with group size, so larger employers are more likely to offer coverage, according to the analysts. More than 96 percent of workers in companies with 50 or more employees are offered health insurance coverage. Third, high-wage firms are more likely to offer insurance coverage than low-wage firms, except for those employers in the largest size category. This difference is driven partly by the tax exclusion for employer premiums leading to greater tax savings for higher-income workers.
PPACA provisions including the employer mandate, small business tax credits and the creation of small business exchanges will all probably increase employer-sponsored coverage, according to the analysis. Meanwhile, the creation of individual health insurance exchanges, premium tax credits to cover premiums through the exchanges and Medicaid expansion create more viable alternatives to employer-sponsored coverage, while the individual mandate requiring everyone to purchase coverage or face a penalty could increase demand for coverage from employers.
Most firms that will be affected by the employer mandate — which requires employers with 50 or more employees to offer coverage or pay a penalty — already provide their workers with coverage. As for smaller employers, the small business exchanges and the new small business tax credit reduce the cost of offering coverage. Furthermore, the analysts concluded the individual mandate should increase employees' demand for coverage from their employers. This would mirror the effect a similar healthcare insurance mandate had in
Additionally, most surveys of employers suggest those currently offering health insurance plans will continue to do so in 2014, and most people enrolled in employer-sponsored coverage will stick with those plans next year. In a 2013 survey, 98 percent of very large firms said they expect health benefits to be an important aspect of compensation in three to five years, according to the analysis.
The earliest data on 2014 employer-sponsored coverage is expected in September next year, when both the National Health Interview Survey administered by the U.S. Census Bureau and the Census Bureau and Bureau of Labor Statistics' Current Population Survey will report on individuals' sources of coverage.
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