Changes in Employer-Sponsored Insurance: Evidence after the Second Year of Implementation of the Affordable Care Act

Critics frequently characterize the Affordable Care Act (ACA) as a threat to the survival of employer-sponsored insurance (ESI). The Medicaid expansion and Marketplace subsidies could adversely affect employers’ incentives to offer health insurance and workers’ incentives to take up such offers. This study will take advantage of timely data from the Health Reform Monitoring Survey (HRMS) for June 2013 through March 2016 to examine, from the perspective of workers, early changes in offer, take-up, and coverage rates for ESI under the ACA.

The HRMS is a rapid-turnaround survey of the nonelderly population and provides real-time estimates on ACA implementation to complement the more robust assessments from federal surveys. The HRMS is based on repeated cross-sectional samples of a nationally representative internet panel of US households—GfK’s KnowledgePanel—and began in January 2013 to provide a base of comparison for the post-ACA implementation period.

Our overall sample includes workers ages 18 to 64.  We also analyze changes in outcomes among key subpopulations of workers, including by firm size (fewer than 50 workers vs. 50 workers or more), family income group (below 250 percent FPL vs. at or above 250 percent FPL), educational attainment level, and race/ethnicity.

We find no evidence that ESI coverage, take-up, or offer rates declined from June 2013 to September 2015. In fact, among all workers, ESI offer rates increased from 82.4 percent in June 2013 to 83.9 percent in September 2015, while ESI coverage rates increased from 71.0 percent to 72.3 percent during this period.  ESI take-up rates remained constant at around 86 percent for all workers. 

We also find that ESI coverage, take-up, and offer rates increased or remained constant for low and high income workers in small or large firms.  Even for low-income individuals working in small firms—people for whom their employers’ incentives to offer insurance are most likely to decline—offer rates increased from 42.8 percent in June 2013 to 48.3 percent in September 2015.

This presentation will include updated findings through March 2016.

Economic incentives in current law, including the tax exemption of employer contributions to insurance and the individual mandate, remain a strong force. The tax incentives mean that most workers are financially better off if they obtain coverage via employment. Since many people are newly required by the ACA to obtain coverage or pay a penalty, the law may have increased incentives for employers to maintain their offers of coverage and for people to take up coverage when it is offered.

It is arguably still too early to see the full effects of the ACA on ESI. Employers may have been slow to understand and react to the new incentives created by the ACA’s major coverage expansions because of uncertainty over the health insurance Marketplaces (which discourages firms from offering coverage) and the employer mandate (which encourages large firms to offer coverage). Nonetheless, results from this study suggest that workers will continue to obtain health insurance through employers.