ACA Will Have Modest Impact On Employer-Sponsored Coverage

Much speculation and research since the enactment of the Patient Protection and Affordable Care Act (ACA) has focused on the question of whether employers that offered health insurance before the ACA would stop offering coverage once the law’s major provisions took effect. However, a recent study from the Urban Institute found that most microsimulation models find that the ACA will have only a modest impact on employer-sponsored health insurance coverage: estimates range from a loss of 6 million to a gain of 13.6 million covered lives.

The report, Monitoring the Impact of the Affordable Care Act on Employers, noted that most employers will continue to have an economic incentive to offer coverage under the ACA, although firms with many low-wage workers may have a disincentive to offer. The largest firms will continue to have a positive economic incentive to offer coverage under the law, while small firms with fewer than 50 employees might face significantly lower, but still positive, economic incentives to offer coverage. The percentage of firms reporting that they expect to stop offering employee health benefits because of the ACA is in the single digits.

Prior to the ACA’s enactment, employer-sponsored health coverage had been decreasing nearly every year since 2000. The share of full-time workers in the smallest firms and their dependents with employer-based coverage fell from 43 percent in 2000 to 33 percent in 2010. In contrast, coverage for full-time workers in firms with 1,000 or more employees and their dependents fell from 87 to 82 percent over the same period. If the rate of employer-sponsored insurance continues to decline, it seems unclear if the ACA would be to blame or that employers are just continuing on the path to reducing or eliminating coverage for their employees.

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