This brief consolidates the results of several UI studies addressing the effects of the Affordable Care Act (ACA) on small firms. We find generally positive effects of the ACA on small employers and their workers. Employers with fewer than 50 workers will experience substantial savings on health costs; employers with 50 to 100 workers will see a very small cost increase. The smallest firms are expected to have higher offer rates, resulting in a small increase in employer coverage. Small firm workers and their families will reap substantial benefits from the Medicaid expansion and subsidies to low-income families.
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Several components of the Affordable Care Act have the potential to affect the health insurance choices and responsibilities of employers. The implications of the reforms will vary, however, depending upon employer size. Some have raised concerns, in particular, with the effects of the reforms for small firms. Specifically, claims have been made that the ACA will increase health care costs for small firms, which could reduce health insurance offers and coverage for small firm employees.1 Here we summarize the findings of several Urban Institute analyses related to the impacts of health reform on small businesses.2 We discuss the challenges small businesses face in the current system, as well as the components of the ACA with the strongest implications for this population. We also present estimates of the impact of the ACA on employer costs, offers and coverage from the Urban Institute's Health Insurance Policy Simulation Model (HIPSM).
Ultimately, 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. While
the effects of the ACA on employer sponsored
coverage for small-firm
workers and their dependents are
estimated to be small, these workers
and their families are expected to reap
significant benefits from the law as a
whole. When accounting for the effects
of the Medicaid expansion, individual
health insurance exchanges and federal
subsidies for low- and moderate-income
families, small-firm workers and their
families are expected to experience
large increases in insurance coverage
End of excerpt. The entire brief with footnotes is available in PDF format.