The prevalence of employer-based health insurance has been slowly shrinking for many years, but new research from the University of Minnesota shows new coverage options under the federal Affordable Care Act did not hasten the decline.
In a study published this month, U researchers looked at federal data before and after major health law changes kicked in during 2014, including an expansion of the Medicaid program in many states, and found the provision of health insurance among employers was largely unaffected.
Employer groups provide health insurance coverage for more than 150 million Americans. While large employers have remained a relatively steady source of these benefits, small firms have been dropping out as costs increase, said Jean Abraham, a professor of health care administration at the U.
“We can separately identify secular trend [with employer coverage rates] from Medicaid impact … because only a subset of states chose to expand Medicaid,” Abraham said. “The secular trend picks up the overall downward trend … but in terms of isolating that effect of Medicaid specifically, we don’t find effects.”
Employer sponsored health insurance is the primary form of coverage for the non-elderly U.S. population, although the nature of the coverage has been changing. Beyond declining rates of coverage among establishments with fewer than 50 workers, the generosity of benefits has been on the decline with higher deductibles and premiums.
In Minnesota, 1.24 million people were covered by employer-sponsored health plans in 2017, according to a report last year from the U’s State Health Access Data Assistance Center. At the time, the average total premium for family coverage in the state was $18,507, with workers covering 27 percent of the tab.
When Congress passed the federal Affordable Care Act (ACA), some feared the law would “crowd-out” employer-sponsored coverage.
The ACA gave states the chance to expand Medicaid to individuals with household incomes up to 138 percent of the federal poverty level, including many low-wage workers. The law also provided subsidies for many individuals at higher income levels to buy private coverage.
The new study, which was published in the International Journal of Health Economics and Management, found “no evidence that employer offers, takeup rates, or out-of-pocket premiums paid by workers changed signiﬁcantly as a result of the Medicaid expansions,” researchers wrote.
The study can’t prove why the crowd-out didn’t happen, but Abraham said employers might have maintained health plans to attract and retain higher-income workers who aren’t eligible for Medicaid. In addition, political uncertainty around the future of the ACA might have persuaded employers to not make changes in their health plans.
Finally, the ACA included measures to promote employer coverage, including financial penalties beginning in 2016 for large companies that don’t offer health plans.