Obamacare and employer-sponsored coverage | Arkansas Blog

Thursday, September 12, 2013

Obamacare and employer-sponsored coverage

Posted By on Thu, Sep 12, 2013 at 4:48 PM

Our post today on Obamacare premiums examined what's coming for folks shopping for their own private health insurance. That doesn't really apply to people with employer-sponsored coverage...unless an employer decides to stop offering coverage! As a little addendum to this morning's post, then, I highly recommend this from Adrianna McIntyre over at the Incidental Economist, rounding up the research on the law's impact on employer-sponsored coverage. Conclusion:  "some employers (though far from a majority) will drop health benefits...The flip side is that more small businesses will offer coverage through the SHOP, which allows them to combine risk pools across employers. Projections for those two shifts come close to canceling each other out." In the aggregate, in other words, Obamacare probably won't have much impact on the amount of employer-sponsored coverage.

Those that do lose employer-sponsored coverage, McIntye points out, are likely to be low-wage workers, "who stand to benefit from compensatory wages — economists agree that there’s a near dollar-for-dollar tradeoff between income and insurance — plus subsidies to shop on the exchange." 

Tom Buchmueller, a professor of risk management and insurance at the University of Michigan, and one of the authors of the latest study on this issue was interviewed by "PBS Newshour" earlier this week. One of the points Buchmueller makes is that, well, not everything is BECAUSE OF OBAMACARE.  

Just look in the last few weeks, when UPS announced that they were gonna restrict coverage for spouses and employees and not provide coverage if the spouse has an offer of coverage. In their press release, they attribute that to the Affordable Care Act, but there's really nothing in the Affordable Care Act that would prompt that decision or make that the most logical response.

I think there's going to be an impulse to attribute these changes to the Affordable Care Act, and it's not clear that's always going to make sense. If you look back at our Exhibit 1, we know that for small employers, coverage has been declining over time as they struggle with the increasing cost. So if we try to think about interpreting changes in terms of the effect of the Affordable Care Act, we have to recognize that in the absence of the law, coverage probably would have continued to fall.

McIntyre agrees: 

We expect rates of employer-sponsored insurance to trend downward, independent of Obamacare. They’ve been doing that for years, but now the ACA provides a politically convenient scapegoat.

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