Last updated on: 6/8/2015 | Author:

Is Obamacare Leading 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

“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.”

PRO (yes)


The American Action Forum (AAF) stated, in an Aug. 25, 2011 article written by AAF Policy Expert Cameron McCosh, titled “Labor Markets and Health Care Reform: New Results,” available at the AAF website:

“The PPACA… provides strong incentives for employers – with the agreement of 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 – and raising the gross taxpayer cost of the subsidies to roughly $1.4 trillion in the first 10 years.”


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

“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 the Committee’s website:

“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 (AAF) 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 the AAF website:

“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 the McKinsey & Company website:

“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

“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.”

CON (no)


RAND Corporation stated, in a 2015 research report written by RAND economist Katharine Grace Carman, PhD, and RAND senior economist Christine Eibner, PhD, titled “Insurance Transitions Following the First ACA Open Enrollment Period,” available at

“The majority of Americans continue to be enrolled in employer coverage, and more gained coverage in employer plans than through the ACA’s Marketplaces…

Our data suggest that a large share of people gaining insurance became newly enrolled in employer coverage. While this may seem surprising, given the intense media attention focused on the Marketplaces, employer coverage is by far the largest source of insurance among Americans under age 65, and the ACA creates new incentives for people to take up employer policies. Specifically, while the ACA mandates that most individuals must enroll in insurance, people are generally ineligible for Marketplace subsidies if they have an affordable offer of coverage from their employer… Furthermore, our results find no significant change in access to ESI from 2013 to 2014, in contrast to the concern that employers would drop ESI…

The ACA has greatly expanded health insurance coverage in the United States, with minimal effect on those who were insured before the major provisions of the law took effect. In addition, the law has expanded coverage using all parts of the health insurance system, including employer plans.”


The Urban Institute stated in its Dec. 2014 study written by senior research associate Fredric Blavin, PhD, research associate Adele Shartzer, PhD, senior fellow Sharon K. Long, PhD, and institute fellow John Holahan, PhD, titled “An Early Look at Changes in Employer-Sponsored Insurance under the Affordable Care Act,” published in Health Affairs:

“Critics frequently characterize the Affordable Care Act (ACA) as a threat to the survival of employer-sponsored insurance. The Medicaid expansion and Marketplace subsidies could adversely affect employers’ incentives to offer health insurance and workers’ incentives to take up such offers. This article takes advantage of timely data from the Health Reform Monitoring Survey for June 2013 through September 2014 to examine, from the perspective of workers, early changes in offer, take-up, and coverage rates for employer-sponsored insurance under the ACA. We found no evidence that any of these rates have declined under the ACA. They have, in fact, remained constant: around 82 percent, 86 percent, and 71 percent, respectively, for all workers and around 63 percent, 71 percent, and 45 percent, respectively, for low-income workers. To date, the ACA has had no effect on employer coverage. Economic incentives for workers to obtain coverage from employers remain strong.”


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 the Washington Post website:

“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.”


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 the Towers Watson website:

“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.”