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Budget Analysts: Group Health Likely to Survive PPACA

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Forecasters at the Congressional Budget Office (CBO) and the congressional Joint Committee on Taxation (JCT) are refusing to predict that the Patient Protection and Affordable Care Act of 2010 (PPACA) will lead to a sharp drop in enrollment in employer-sponsored health plans.

The best estimates available suggest that PPACA could cut total U.S. group health plan enrollment by 3 million to 5 million during the period from 2019 to 2022, CBO and JCT analysts write in a PPACA group health report prepared in response to questions about earlier forecasts.

Originally, the analysts were predicting PPACA would cut group health plan enrollment by 3 million.

If PPACA did not exist at all, group plan enrollment could be about 161 million, the analysts say.

Surveys by Gallups and other organizations have found that group enrollment has been falling for years.

If PPACA takes effect as written and works as drafters expect, the law will set federal standards for non-grandfathered group health coverage starting in 2014 and give individuals the ability to buy coverage on their own on a guaranteed-issue, mostly community-rated basis starting.

PPACA will require most employers over a certain size to offer health coverage. The law will permit the employers to get out of offering coverage by paying a penalty for each employee without a minimum level of group health coverage.

Many PPACA critics have argued that employers will escape from the cost and headaches of complying with PPACA by sending large numbers of employees to buy coverage in the individual market.

The CBO and JCT analysts reject the idea that they can make firm predictions about how PPACA will work.

“There is clearly a tremendous amount of uncertainty about how employers and employees will respond to the set of opportunities and incentives under that legislation,” the analysts say. “Assessing the effects of broad changes in the nation’s health insurance system requires assumptions and projections about a wide array of technical, behavioral, and economic factors.”

Changes in the assumptions fed into the forecasting models lead to changes in group plan enrollment and budget impact predictions, the analysts say.

But the analysts also reject the idea that PPACA will obviously lead to huge drops in group plan enrollment.

Even if the predictions turn out to be wrong, the effects of some errors could offset the effects of other errors, the analysts say.

The analysts suggest, for example, that PPACA-caused drops in group plan enrollment could end up making commercial group health insurance more attractive, by lowering the cost of group health coverage.

Employers participating in some surveys have indicated strong interest in dropping group health coverage, but the survey results conflict, and “it is doubtful that any survey conducted today could provide very accurate predictions of employers’ future decisions,” the analysts say. “Responses to such surveys have no consequences for the responders, do not require careful analysis or extensive deliberations, and are necessarily based on limited information about the various ways that [PPACA] will affect the market for health insurance.”

The analysts note that they have not yet analyzed how the Massachusetts health system change law, which resembles PPACA in some ways but differs in others, has affected that state’s group health plan market.

“Still, it is noteworthy that employment-based health insurance coverage appears to have increased in Massachusetts since that state’s reforms were implemented,” the analysts say.


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