Will Obamacare Lead to a Decline in Employment-Based Health Insurance? – DEBATED
General Reference (not clearly pro or con)
John E. Dicken, Director of Health Care Issues at the Government Accountability Office (GAO), wrote in his July 13, 2012 report "Estimates of the Effect on the Prevalence of Employer-Sponsored Health Coverage," available at www.gao.gov:
"The five studies GAO reviewed that used microsimulation models to estimate the effects of the Patient Protection and Affordable Care Act (PPACA) on employer-sponsored coverage generally predicted little change in prevalence in the near term, while results of employer surveys varied more widely. The five microsimulation study estimates ranged from a net decrease of 2.5 percent to a net increase of 2.7 percent in the total number of individuals with employer-sponsored coverage within the first 2 years of implementation of key PPACA provisions, affecting up to about 4 million individuals... Longer-term predictions of prevalence of employer-sponsored coverage were fewer and more uncertain, and four microsimulation studies estimated that from about 2 million to 6 million fewer individuals would have employer-sponsored coverage in the absence of the individual mandate compared to with the mandate."
Will Obamacare Lead to a Decline in Employment-Based Health Insurance? – DEBATED
Jessica Banthin, PhD, economist, and Paul Jacobs, PhD, analyst, for Congressional Budget Office's (CBO) Health and Human Resources Division, wrote in their Mar. 15, 2012 report "The Effects of the Affordable Care Act on Employment-Based Health Insurance," available at www.cbo.gov:
"CBO [Congressional Budget Office] and the staff of the Joint Committee on Taxation (JCT) continue to expect that the Affordable Care Act (ACA)—the health care legislation enacted in March 2010—will lead to a small reduction in the number of people receiving employment-based health insurance...
As reflected in CBO's latest baseline projections, the two agencies now anticipate that, because of the ACA, about 3 million to 5 million fewer people, on net, will obtain coverage through their employer each year from 2019 through 2022 than would have been the case under prior law."
[Editor’s Note: A table from the CBO’s updated "May 2013 Estimate of the Effects of the Affordable Care Act on Health Insurance Coverage” explains that "the change in employment-based coverage is the net result of projected increases in and losses of offers of health insurance from employers and changes in enrollment by workers and their families. For example, in 2019, an estimated 11 million people who would have had an offer of employment-based coverage under prior law will lose their offer under current law, and another 3 million people will have an offer of employment-based coverage but will enroll in health insurance from another source instead. These flows out of employment-based coverage will be partially offset by an estimated 7 million people who will newly enroll in employment-based coverage under the Affordable Care Act.”]
The House of Representatives Ways and Means Committee stated in its May 1, 2012 report "Broken Promise: Why ObamaCare Will Force Americans to Lose the Health Care Coverage They Have and Like," available at www.waysandmeans.house.gov:
"As a result of the Democrats' employer mandate, many employers who offer coverage to their employees will be left with a choice: continue offering health insurance (which is expected to become more expensive because of the Democrats' health care law) to their employees or pay a penalty for not offering such coverage. Unfortunately... it will be far cheaper for employers to simply drop their health insurance and pay the fine, because the costs of meeting the burdensome mandates required for health insurance plans far exceed the price of the fine...
The Democrats' health care law contains a number of policies that create perverse financial incentives for employers to stop offering health insurance to their employees, perhaps none more so than the employer mandate."
Douglas Holtz-Eakin, PhD, President of the American Action Forum and former Director of the Congressional Budget Office, and Cameron Smith, MPP, Chief Operating Officer of the American Action Network, stated in their May 27, 2010 article “Labor Markets and Health Care Reform: New Results,” available at americanactionforum.org:
"The Patient Protection and Affordable Care Act (PPACA) will have profound implications for U.S. labor markets. The PPACA is fiscally dangerous, raising the risk of higher labor (and other) taxes at a time when the job market is struggling. It provides strong incentives for employers - and their employees – to drop employer-sponsored health insurance for as many as 35 million Americans, perhaps leading to widespread turmoil in labor compensation and employee insurance coverage…"
Shubham Singhal, Director of McKinsey & Company's Detroit office, Jeris Stueland, Consultant in the New Jersey office, and Drew Ungerman, Principal in the Dallas office, wrote in their June 2011 study "How US Health Care Reform Will Affect Employee Benefits," available at www.mckinseyquarterly.com:
"Overall, 30 percent of employers will definitely or probably stop offering ESI [employer-sponsored insurance] in the years after 2014.
Among employers with a high awareness of reform, this proportion increases to more than 50 percent, and upward of 60 percent will pursue some alternative to traditional ESI.
At least 30 percent of employers would gain economically from dropping coverage even if they completely compensated employees for the change through other benefit offerings or higher salaries...
The propensity of employers to make big changes to ESI increases with awareness largely because shifting away will be economically rational not only for many of them but also for their lower-income employees, given the law's incentives."
The Lewin Group, a health care and human services policy research and management consulting firm, said in its June 8, 2010 working paper “Patient Protection and Affordable Care Act (PPACA): Long Term Costs for Governments, Employers, Families and Providers,” available at lewin.com:
"The availability of the expanded Medicaid program and premium subsidies for lower wage workers [under the PPACA] is likely to cause some employers to discontinue coverage. This is particularly true of low-wage employers where workers can obtain publicly subsidized coverage for less than it costs the employer to provide the same coverage… [W]e estimate an overall reduction in the number of people with employer sponsored coverage of 2.8 million people. This includes about 17.2 million people in firms that will discontinue their plans under the Act. This loss of coverage is largely offset by an increase in ESI of about 14.4 million people in firms that decide to start offering coverage…"
Ezra Klein, Columnist at the Washington Post and contributor for MSNBC, wrote in his May 24, 2013 article “Everything You Know about Employers and Obamacare Is Wrong,” available at washingtonpost.com:
"There’s real concern that companies will see the Affordable Care Act as an opportunity to drop health insurance for their employees and let taxpayers pick up the tab. For those with more than 50 full-time workers, that’ll mean paying a $2,000 to $3,000 penalty for each one, but that’s a whole lot cheaper than paying for health insurance… But people simply misunderstand why employers offer health-care benefits. They’re not doing it as a favor to employees. And they’re not doing it because anyone is making them… Employers offer health insurance because employees demand it. If you’re an employer who doesn’t offer insurance and your competitors do, you’ll lose out on the most talented workers. An employer who stopped offering health benefits would see his best employees immediately start looking for other jobs…
There are a couple other reasons to expect that employers won’t be eager to drop coverage. First, because employer-provided health benefits are not taxed, employers can pay their workers more by paying them partly in health-care benefits. Let’s say an employer decides to stop offering health benefits but, in a bid to keep employees happy, promises to give them the cash value of their coverage. The employer would have to spend more on the wages than it spends on the benefits, as the wages are taxed… Second, the fraction of employers actually affected by the health law’s mandate is very small.
Which is all to say that, for most companies, the Affordable Care Act won’t bring much change at all, and so there’s little reason to expect their behavior will change, either. And if it does change, it might not change in the direction we expect.”
Christine Eibner, PhD, Economist at RAND, Federico Girosi, PhD, Senior Policy Researcher at RAND, Carter C. Price, PhD, Associate Mathematician at RAND, Amado Cordova, Senior Engineer at RAND, Peter S. Hussey, PhD, Policy Researcher at RAND, Alice Beckman, Policy Researcher at RAND, and Elizabeth A. McGlynn, PhD, Director of the Kaiser Permanente Center for Effectiveness and Safety Research, stated in their Sep. 3, 2010 study "Establishing State Health Insurance Exchanges: Implications for Health Insurance Enrollment, Spending, and Small Businesses," available at www.rand.org:
"The microsimulation predicts that PPACA will increase insurance offer rates among small businesses from 53 to 77 percent for firms with ten or fewer workers, from 71 to 90 percent for firms with 11 to 25 workers, and from 90 percent to nearly 100 percent for firms with 26 to 100 workers... The increase in employer offer rates is driven by workers' demand for insurance, which increases due to an individual mandate requiring all people to obtain insurance policies."
Towers Watson, global human resources consulting firm, stated in its Mar. 2012 report "17th Annual Towers Watson/National Business Group on Health Employer Survey on Purchasing Value in Health Care," available at www.towerswatson.com:
"Amid the political, legislative and judicial uncertainty, most employers are steadfast in their commitment to keeping active health care benefits as a central component of their employee value proposition...
While many employers are considering their options after the Exchanges open in 2014, the majority of large companies today remain committed to the optimal design and delivery of their health care programs...
In the end, few companies plan to either discontinue their health care programs or shift strategy to a defined contribution option by 2014 or 2015. All signs indicate that companies will continue to focus on the most effective ways to control rising costs and improve employee health and well-being."
Kathryn L. Moore, JD, Professor of Law at the University of Kentucky, wrote in her Aug. 1, 2011 article “The Future of Employment-Based Health Insurance after the Patient Protection and Affordable Care Act,” available at the Nebraska Law Review website:
"The Patient Protection and Affordable Care Act (PPACA) does not eliminate the system’s reliance on employment-based health insurance. Instead, it builds on, and arguably strengthens, the employment-based system… Health care in the United States has long been financed principally through employment-based health insurance. At least in the short run, the PPACA is unlikely to disturb that balance. PPACA’s incentives with respect to employment-based health insurance are unlikely to change significantly the number of employers who elect to offer employment-based health insurance. The penalty under the large employer pay-or-play mandate, though low relative to the cost of health insurance premiums, is unlikely to affect employers’ willingness to offer health insurance, at least in the short run. The small employer tax credit may encourage some employers that do not already offer health insurance to offer health insurance."
Stacey McMorrow, PhD, Research Associate, Linda J. Blumberg, PhD, Senior Fellow, and Matthew Buettgens, PhD, Senior Research Methodologist in the Health Policy Center at the Urban Institute, stated in their June 2011 report "The Effects of Health Reform on Small Businesses and Their Workers," available at www.urban.org:
"We find little evidence that the ACA will negatively affect small firms, and, instead, we find evidence of significant benefits for these employers and their workers. The law expands coverage options for small firms while limiting the new requirements imposed on this group. The smallest firms will see a significant increase in offer rates under the ACA, and firms of all sizes will see substantial savings on premium contributions."
Avalere Health LLC stated in its June 17, 2011 report “The Affordable Care Act’s Impact on Employer Sponsored Insurance: A Look at the Microsimulation Models and Other Analyses,” available at avalerehealth.net:
"Our analysis suggests that the employer sponsored insurance (ESI) market will be fairly stable after 2014 when key Affordable Care Act (ACA) coverage provisions go into effect. The microsimulation models estimates from RAND, the Urban Institute, the Lewin Group and the Congressional Budget Office (CBO) show net changes to ESI ranging from –0.3 percent to + 8.4 percent compared to baseline projections without ACA implementation - not major changes in the market. Similarly, large-scale employer surveys and analyses conducted by benefits consultants, investor groups, and other consulting firms also confirm that most employers will remain committed to providing coverage. Stability in ESI is driven by expectations that large firms, whose policies cover more people than small- and medium-firm policies combined, will continue offering health benefits. Moreover, small businesses that will benefit from new economies of scale in the small business exchanges are likely to offer coverage for their employees through the exchange and possibly newly offer coverage if they previously did not."