By Victoria Moran, J.D., M.H.A.
Employer-sponsored coverage rates saw a modest increase between 2013 and 2017, attributable to economic improvement and the individual mandate imposed by the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). However, coverage rates for employer-based plans continue to decrease, and it is unlikely that rates will ever match prior levels.
Employer-based coverage continues to be the largest source of insurance coverage for Americans (156.3 million), but a recent analysis by the Kaiser Family Foundation (KFF) shows that employer-sponsored plans decreased by 9 percent from 1999 to 2017. Lower income employees were less likely to have employer-sponsored coverage, and households with incomes under 400 percent of poverty experienced the most significant decline. When tax credits and subsidies were introduced, smaller employers stopped offering coverage, believing their employees had more affordable options through the marketplace if they were not offered employer-based plans. Even with the recent increase, the KFF found no evidence that employer-sponsored coverage will reach past levels.
Significant findings. Using the National Health Interview Survey, the KFF analyzed employer-sponsored insurance coverage by persons under 65 years old (nonelderly). Among its findings:
- employer-based coverage for persons under 65 increased from 2013 (56.3 percent) to 2017 (58.4 percent), which was 9 percent lower than a rate of 67.3 percent coverage in 1999;
- the most significant decrease in coverage was among people with incomes under 400 percent of poverty ($85,320 for three-person family in 2019); and
- the population of nonelderly increased by 31.5 million people since 1999, but employer-based coverage is roughly the same (159.4 million covered in 1999, 156.3 covered in 2017).
Factors influencing upward trend. KFF’s analysis identified two specific factors that may explain the recent increase in coverage: (1) economic improvement and (2) the individual mandate. With economic gains since the recession in 2008–2009, incomes and employment have increased, so employer plans are more affordable for employees and more people are eligible for coverage. The individual mandate may have impacted coverage because employees who would have declined employer coverage absent a mandate, instead chose to participate in the workplace plan. The employer mandate may have also increased participation with large employers being required to offer coverage to all full-time employees, including lower-wage employees, who were not offered coverage in the past.
How smaller employers affected coverage. Since lower income consumers not offered coverage at work were eligible for tax credits, some smaller employers (not subject to the employer mandate) terminated their employer-based plans on the belief that employees would have more affordable options on the individual market. However, after the rapid rise of premiums, employer-based plans may now be the more favorable option.
Looking down the road. ACA marketplace enrollment has continued to decrease into 2019, making it possible that some people may be moving towards employer-based plans. However, the KFF found no evidence that coverage under employer-sponsored plans will be able to return to past levels. While employer-sponsored insurance still represents the largest source of coverage for those under 65, its significance has decreased among those with incomes below 400 percent of poverty level.
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