Some have argued that the Patient Protection and Affordable Care Act would erode employer-sponsored insurance (ESI) by providing incentives for employers to stop offering coverage. Others have claimed that most businesses would face increased costs as a result of reform. A new study finds that overall ESI coverage under the ACA would not differ significantly from what coverage would be without reform. The average employer contribution per person covered by ESI would decrease by nearly 8 percent for small firms and would decrease slightly for larger firms. Total employer health care spending would be 0.6 percent lower under the ACA.
The text below is an excerpt from the complete document. Read the entire report in PDF format.
Since the enactment of the Patient
Protection and Affordable Care Act in
March 2010, many people, particularly in
the business media and advocacy groups
opposed to the ACA, have argued that
health reform would erode employersponsored
insurance by providing
incentives for many employers to stop
offering coverage. Using the Urban
Institute's Health Insurance Policy
Simulation Model, we estimate how
the Affordable Care Act would affect
employer-sponsored insurance and
employer health care costs. We separate
the effects on businesses of different
sizes. Small businesses are defined here as
those employing 100 or fewer workers.
These employers would be eligible for
new employer-sponsored insurance
exchanges (or SHOP exchanges) under
the ACA. Medium businesses are those
employing 101 to 1,000 workers, and
large businesses are those employing
more than 1,000 workers.
To investigate the effects of health
reform on ESI, we simulate the ACA as
if it were fully implemented in 2010 and
contrast the results with the prereform
HIPSM baseline results for 2010. We also
present HIPSM estimates on how ESI
coverage would have changed over time
without health reform, given changes
in economic conditions and long-term
health care cost growth.
Some have claimed that the ACA will
greatly increase health care costs for
employers and that many employers
would drop ESI coverage as a result.
Our results show the opposite—
the ACA has little effect on overall
ESI coverage and overall employer
spending on health care would be
slightly lower under the ACA. We
discuss the arguments for why some
employers might stop offering ESI
after reform and provide reasons why
we believe claims that ACA would
cause major declines in ESI coverage
End of excerpt. The entire report is available in PDF format.