Will companies drop health coverage because of Obamacare?

September 10, 2013, University of Michigan

Will 2014 mark the beginning of the end for employer-sponsored health insurance as we know it?

Since the passage of the Affordable Care Act in 2010, have debated that very question. Thomas Buchmueller, a business economics professor at the University of Michigan's Ross School, and colleagues looked at theoretical and empirical evidence to put that question in context in a paper published today in the September issue of Health Affairs.

Buchmueller and co-authors Colleen Carey, a in the School of Public Health, and Helen Levy, a professor with the Institute for Social Research and the Ford School of Public Policy, say the models they studied point to a relatively small decline in employer-sponsored coverage as a result of health reform.

That's despite Obamacare being cited last month as part of the reason United Parcel Service announced that it would end for the spouses of white-collar workers who could obtain coverage through their own employers. The move affects 15,000 spouses.

"We need to resist attributing every change in health insurance from here on to Obamacare," Buchmueller said.

The that they reviewed predict a relatively small decline in employer-sponsored coverage as a result of health reform, which the authors believe are likely to be correct.

The predicted change in employer-sponsored coverage ranges from a 1.8 percent decline to an increase of 2.9 percent.

"The response of employers to is important for several reasons," Levy said. "First, a reduction in could increase federal outlays if more workers receive premium tax credits in the exchanges or enroll in Medicaid."

Second, if the employers who drop coverage have relatively less healthy workers, this worsens the exchange risk pool, driving up average premiums. And lastly, the ACA was presented to the American public as a reform that would not seriously disrupt existing employer-sponsored coverage, she said.

"To the approximately 160 million Americans who have such coverage and are for the most part quite satisfied with it, large-scale employer dropping of coverage would be an unwelcome surprise," Levy said.

Carey notes that since the employer penalty for not offering coverage will not take effect until 2015, it may be several years before the true effects of these policies become evident.

The authors say that a shift away from employer-sponsored coverage may not be all bad. A better functioning individual health insurance market has the potential to improve labor market efficiency by reducing job-lock, eliminating a barrier to entrepreneurship and making it easier for workers to find a job and an insurance plan that matches their preferences.

"If the shift from employer-sponsored insurance to individual coverage is greater than projected, these labor market gains may be significant," Carey said.

Explore further: Employer-based health insurance premiums rose modestly in 2013

Related Stories

Employer-based health insurance premiums rose modestly in 2013

September 2, 2013
(HealthDay)—Employer-sponsored health insurance premiums rose only modestly in 2013, according to research published in the August issue of Health Affairs.

Survey: Health insurance costs outpace wage gains

August 20, 2013
An annual survey shows that the average cost for employer-sponsored health insurance rose modestly this year, but it still outpaced worker wage increases.

Loopholes in health care law could result in employee harassment

July 23, 2013
The contrasting incentives of employers and employees under the Affordable Care Act ultimately may result in increased employee harassment and retaliation claims, two University of Illinois law professors say in a paper they ...

Premiums expected to be about 20 percent lower in 2014

July 23, 2013
(HealthDay)—Premiums in the Health Insurance Marketplace are likely to be about 20 percent lower than anticipated in 2014, according to a report published by the U.S. Department of Health and Human Services (HHS).

Higher proportion of California children uninsured than in US, analysis shows

November 14, 2012
Compared to the nation, a higher proportion of children in California are uninsured, one in every 10 children or more than 1.1 million in 2011. More of California's children have public health insurance and fewer through ...

Recommended for you

Sleep better, lose weight?

January 17, 2018
(HealthDay)—Sleeplessness could cost you when it's time to stand on your bathroom scale, a new British study suggests.

Who uses phone apps to track sleep habits? Mostly the healthy and wealthy in US

January 16, 2018
The profile of most Americans who use popular mobile phone apps that track sleep habits is that they are relatively affluent, claim to eat well, and say they are in good health, even if some of them tend to smoke.

Improvements in mortality rates are slowed by rise in obesity in the United States

January 15, 2018
With countless medical advances and efforts to curb smoking, one might expect that life expectancy in the United States would improve. Yet according to recent studies, there's been a reduction in the rate of improvement in ...

Teens likely to crave junk food after watching TV ads

January 15, 2018
Teenagers who watch more than three hours of commercial TV a day are more likely to eat hundreds of extra junk food snacks, according to a report by Cancer Research UK.

Can muesli help against arthritis?

January 15, 2018
It is well known that healthy eating increases a general sense of wellbeing. Researchers at Friedrich-Alexander-Universität Erlangen-Nürnberg (FAU) have now discovered that a fibre-rich diet can have a positive influence ...

Your dishwasher is not as sterile as you think

January 13, 2018
(HealthDay)—Your dishwasher may get those plates spotless, but it is also probably teeming with bacteria and fungus, a new study suggests.

0 comments

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.