About half of small-firm employees worked in establishments that offered health insurance from 2013 to 2020, whereas more than 99 percent of large-firm employees worked in establishments that offered coverage. Yet, we find that the small-group market continues to serve as an important source of health insurance for many workers. Since the implementation of the Affordable Care Act (ACA), the small-group market has been characterized by relative stability, rather than a sudden decline as some policy analysts predicted. The main findings of our study are as follows:
- Health insurance enrollment among small-firm employees remained relatively stable from 2013 to 2019, hovering between 8.9 and 9.6 million enrollees.
- The rate at which small firms offer health insurance coverage decreased by just 2.6 percentage points from 2013 to 2020. For comparison, it declined by 10.6 percentage points from 2002 to 2012. Steady offer rates likely reflect consistent demand for employer-sponsored coverage from small-firm employees and greater stability in health insurance costs resulting from ACA reforms.
- Small declines in take-up and coverage rates were comparable across small and large firms during the study period. Take-up fell by 4.4 percentage points in the small-group market and by 4.3 percentage points in the large-group market.
- Annual premium growth in the employer-sponsored insurance (ESI) market was similar across all firm sizes; premiums for single coverage grew by an average of 3.2 percent per year in the small-group market and by 3.7 percent in both the medium- and large-group markets. Nongroup premiums were significantly more unstable during this period, which may have affected small employers’ decisions to maintain coverage.
- The share of establishments offering a self-insured plan grew from 13.2 percent in 2013 to 16.0 percent in 2020. Despite early fears that small firms would transition to self-insurance en masse to avoid market regulations, small firms were less likely to offer self-insurance than larger firms.