GAO on the PPACA and Employer-Provided Health Insurance
When the federal health “reform” law was passed, one of the heated points of contention was the effect on the employer-sponsored health care coverage market. Proponents claimed that employment-based coverage would actually expand, largely due to the penalties for not providing coverage, and the President famously claimed that premiums would show a substantial decrease if the law were passed. Opponents were concerned that new regulatory requirements might so burden employers that they would drop coverage, and the penalties would be inadequate to deter that from happening. A number of groups have run models or surveys purporting to show the effect of the reform act on employer-provided health insurance and the Government Accounting Office has released a report which reviews all the evidence. (GAO Report) The GAO looked at both microsimulation models and surveys and found a wide variation in predicted effects, with surveys showing more variation than the models. It attempted to understand factors contributing to the variation and how effects may be different for different types of employers.
In the five microsimulation models, estimates ranged from a 2.5% net decrease to a 2.7% increase in the number of people with employer-sponsored insurance, but the time frame for the predictions was only two years after full implementation, with longer-term predictions less prevalent and more uncertain. Nineteen surveys were reviewed, of which 16 found that between 2% and 20% of firms might drop coverage, with most estimates clustering at the lower end of the range. Only a few of the surveys looked at whether companies that currently don’t have insurance might begin offering it, with the three that did showing a 1% to 28% increase. The GAO noted a substantial lack of certainty in the models regarding the details of employer and employee decision-making, which limits the outcomes of those models. One thing that is certain, the reform act has not reduced health care costs or premiums, as promised by the President, and even the proponents of the law are no longer claiming it will. In fact, it appears most likely that if the law is fully implemented, it will likely have caused a significant increase in the cost of employer-based insurance, which certainly isn’t likely to encourage employers to retain coverage.