The Patient Protection and Affordable Care Act (PPACA) should not have a dramatic effect on the employer-sponsored insurance market – unless it does.
Analysts at Avalere Health L.L.C., Washington, a health policy strategy firm, have included that warning at the end of a presentation on the effects of possible effects of PPACA on the group health market.
The analysts reviewed existing statistical analyses and used other methods to predict how the federal legislative package might affect employers in 2014, when employers will face a choice between offering health coverage that meets federal standards or paying a penalty and sending employees out to buy their own coverage on a guaranteed-issue, mostly community-rated basis through a new health insurance exchange distribution system.
Typical group health experts that have conducted simulations are predicting that PPACA could cause a change in group health enrollment ranging from 4.5% shrinkage to 9% growth, the Avalere analysts say.
Firms with a higher share of workers who place a high value on health benefits and have little opportunity to qualify for the new federal health insurance purchase tax subsidies seem more likely to continue to offer coverage, the Avalere analysts say.
Firms with a large percentage of younger, lower-paid, healthier workers who place little value on health benefits or are likely to qualify for health insurance purchase subsidies may be more likely to drop coverage, the analysts say.
“Employer surveys and analyses confirm that most employers will continue to provide coverage,” the Avalere analysts say. “Stability is driven by expectations that large firms will continue offering health benefits.”
But, “if a few large employers drop coverage after 2014, others may follow in a ‘me too’ effect,” the Avalere analysts warn.
If even a “couple of highly visible large employers” drop coverage, that could possibly lead to a large-scale exodus, the analysts say.
Group health coverage also could erode more quickly than expected if the insurance exchanges prove to be highly successful and employers and workers actively seek access to exchange coverage, the analysts say.