Should we have expected this week’s big surprise on employer health insurance?
By: Jason Millman (Washington Post) April 2014
There’s one Obamacare number that stands out above the rest this week — 8.2 million. That’s how many people have taken up employer-sponsored insurance since September, and most of them were previously uninsured, according to a Rand Corp. survey issued Tuesday.
The Rand survey, which naturally comes with limitations, attributes the drop in the uninsured rate over the past six months mostly to gains in employer coverage. For all the predictions of employers dumping coverage for health insurance exchanges, this was a pretty surprising finding. Obamacare was actually driving millions of uninsured Americans to sign up for employer insurance.
But maybe that shouldn’t have been surprising?
The Rand survey reminded me of another survey I wrote about just last week. Large employer members of the HR Policy Association, who laid out expected costs from the Affordable Care Act, said they expected the law’s individual mandate will add pressure to their budgets. (The one really big caveat: HR Policy Association’s report didn’t account for cost savings the ACA would create.) In other words, these large employers said the Obamacare requirement for people to get insurance — the individual mandate — would drive more of their workers to sign up for their coverage.
“The RAND study validates large employers’ projections that the individual mandate would increase take up rates, and the costs associated with those additional take ups,” said Tevi Troy, president of the American Health Policy Institute, the think tank founded by the by HR Policy Association
Timothy Jost, a professor at Washington and Lee University School of Law, and a supporter of the health-care law, also said the survey from Troy’s group supports the idea that the individual mandate will increase the number of those signing up for employer coverage. “This is a factor that must be considered in the lively debate about whether Obamacare is covering the uninsured,” he said.
We still need some hard data before we can project enrollment in employer plans with greater confidence. The Rand survey, which was based on a nationally representative sample of 2,500 adults surveyed each month for the past few months, comes with a margin of error of 3.6 million and a 95 percent confidence rate. So that means researchers are still pretty sure at least 4.6 million gained new employer coverage since September.
The Rand report stands in contrast to the Congressional Budget Office, which in February predicted no major change in employer plan enrollment for 2014 because of the health-care law. The CBO also predicted employers would cover 2 million fewer people in 2015, 6 million fewer in 2016 and eventually flattening out at 7 million fewer people in employer plans.
Some say they expected an increase this year based on the experience of the 2006 Massachusetts health-care law, which was the foundation for the ACA. Like the federal law, Massachusetts has individual and employer mandates requiring insurance coverage at risk of penalty.
PwC’s Health Research Institute, which last year examined the state’s experience, reported that the percentage of Massachusetts employees who got insurance through their jobs increased from 70.8 percent in 2006 to 72.1 percent in 2011. Over the same time, the national rate dropped from 68.2 percent to 58.3 percent, the institute said.
The gains in Massachusetts weren’t entirely felt across the board, PwC reported. The group’s researchers found employer coverage declined in retail and service industries, while the construction, transportation and utility industries saw gains.
Another study in Health Affairs that examined the first three years of the Massachusetts law said fears of employers dumping coverage didn’t come to fruition. Urban Institute researchers Sharon Long and Karen Stockley found that more workers reported having an offer of employer insurance and taking up that insurance.
Of course, Obamacare’s employer mandate has been delayed twice, so its true impact hasn’t been felt. And the ACA and Massachusetts penalties are structured differently. The Massachusetts employer mandate required businesses with at least 11 employees to provide coverage or pay a fine of up to $295 per employee. The penalty threshold is higher for the ACA employer mandate, which requires employers with 50 workers or more to provide coverage or face a $2,000 to $3,000 fine for each worker.
Still, the health-care law’s individual mandate is scheduled to take effect this year, and that may provide some context for the Rand findings.
“The experience in Massachusetts also suggests that finding a job with health benefits may become more important under the ACA’s individual mandate,” PwC researchers wrote.
Long, of the Urban Institute, pointed out that there’s still low awareness of the individual mandate. Urban’s own surveys have found just about 40 percent of uninsured working-age adults are aware of the coverage requirement. So, she also wonders what’s driving the increase in employer coverage.
“I wouldn’t be surprised to see increased [employer] coverage, Long said, “but the speed and magnitude of the estimate is surprising.”
