Enrollment in employment-based health plans is declining faster than Congressional Budget Office analysts thought it would.CBO analysts predicted the number of people in group health plans would fall just 0.3 percent, or 500,000, this year. Actual group plan enrollment may have fallen 2 percent, to 177 million in the first quarter of 2014, from 180 million a year earlier.
Benefit Revolution: Enrollment in Employment-based Health Plans is Declining About 7 Times Faster Than Government ProjectionsJuly 3, 2014
Employer Health Plan Sponsors: Running Harder, to Stay in Place | e21 – Economic Policies for the 21st CenturyJune 27, 2014
Highlights from a Mercer briefing in Washington earlier this month include:• Last year’s slow growth of total employee health benefits costs a 16-year low will speed up in 2014, even after employers make a number of plan changes to reduce costs• Overall private employer coverage levels will remain essentially unchanged by the ACA in the near term.• ACA-driven reductions in employee working hours are real, but more prevalent among smaller employers and particular industry sectors• Private employers consistently see the 2018 “Cadillac” tax on high-cost benefits plans as their #1 complaint and are taking a number of early steps to avoid ever paying it.
CMS on Tuesday June 10 said “yes” to all 18 federally facilitated SHOP exchange states that asked to not implement employee choice in 2015, and confirmed that 14 FF-SHOP states did not ask for a transition so they will move ahead with the model next year.
This study provides plausibly causal estimates of the effect of public insurance coverage on the employment of non-elderly, non-disabled adults without dependent children (“childless adults”). We use regression discontinuity and propensity score matching difference-in-differences methods to take advantage of the sudden imposition of an enrollment cap, comparing the labor supply of enrollees to eligible applicants on a waitlist. We find enrollment into public insurance leads to sizable and statistically meaningful reductions in employment up to at least 9 quarters later, with an estimated size of from 2 to 10 percentage points depending upon the model used.
The paper, published by the Urban Institute, makes the case that this requirement will not lead to more people getting coverage because those firms that don’t provide it will likely opt for the penalty. Meanwhile, news outlets also report on how the health law has become an earnings’ report scapegoat as well as how premium calculations are causing small businesses confusion.
The House of Representatives successfully included a valuable escape hatch from Obamacare in the recent “doc fix” legislation, but members are getting blow-back from critics who say the provision fixes and even expands Obamacare.
That is nonsense. The provision eliminated the cap on deductibles for small group plans, giving small businesses the freedom to offer high-deductible plans that may be paired with a Health Savings Account. This is a very good thing that gives them an option to offer more affordable insurance to employees.
Rory Cooper, a spokesman for House majority leader Eric Cantor, said, “This is another in a series of changes to Obamacare that the House has supported to help save Americans from being harmed by the law, and we’re glad to see the president signed it into law.”
A large portion of Sodexo’s 125,000 U.S. workers are variable, and about 10,000 of them are losing access to health insurance, paid vacation and sick days and other benefits available to full-timers. Sodexo says it has taken steps to ease the strain on workers, but avers that the new formula lets it manage costs and stay competitive in a business driven by low-margin contracts.
Other employers are likely to follow Sodexo’s lead in reclassifying workers as they get closer to the ACA’s Jan. 1, 2015 compliance deadline, said Gary Claxton, a vice president at the Henry J. Kaiser Family Foundation, who said that businesses sought clear guidance from government officials on how to handle workers with nonstandard hours. Many of those workers, he added, may be better off on public health-care exchanges if they qualify for tax credits to subsidize their coverage.
About 68% of U.S. employers have variable-hour workers, according to benefits consulting firm Mercer LLC, with most of them in the hospitality, retail and education industries.
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.
Based on my calculations (methodology at the end of the post), coupling a repeal of the employer mandate with a cap on the ESI tax exclusion reduces the deficit by between $371.1 and $366.4 billion from 2016 to 2023. (This is an 8-year estimate because the employer mandate only begins in 2016.)
The health care law is also helping to end what could be called “entrepreneurship lock.” Simply put: prior to the ACA a person with a pre-existing condition who wanted to start her own business often had to choose between the security of employer-provided coverage or face potential discrimination in the individual market. Two business partners who wanted to leave their company to turn a new idea into a new job-creating business could be forced to shelve their entrepreneurial dream because a family member had a preexisting condition and could face sky-high rates or being shut out completely from finding insurance. Today, there is strong evidence that when affordable healthcare isn’t exclusively tied to employment, in more instances people choose to start their own companies. Now, countless Americans will have the security of affordable, quality coverage so they can focus on starting America’s next great business.
Editor’s note: if access to health insurance stimulates entrepreneurship, shouldn’t Europe be outpacing the U.S. by a considerable margin in entrepreneurial activity? I’m not aware of strong evidence that’s true: this study suggests the opposite. http://capitalism.columbia.edu/files/ccs/CCSWP9_FrydmanKhanRapaczynski.pdf