The Effects of the Affordable Care Act on Employment-Based Health Insurance
|Targeted News Service|
CBO and the staff of the
Despite the care and effort that CBO and JCT have devoted to modeling the health insurance system and the provisions of the ACA, 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. In response to questions from Members of
* CBO and JCT continue to expect that the ACA will lead to a small reduction in employment-based health insurance. That projection arises from the agencies' modeling of the many changes in opportunities and incentives facing employers and employees under the ACA, and it is consistent with the findings of other analysts who have carefully modeled the nation's health insurance system. * Significant changes in some of the key assumptions underlying the estimates lead to somewhat higher or lower projections of the change in employment-based health insurance and the budgetary impact of the ACA. However, differences in the projected change in employment-based health insurance tend to have limited effects on the projected budgetary impact of the law because changes in the availability and take-up of such insurance affect the federal budget through several channels that are partly offsetting. Indeed, one scenario examined here shows that larger reductions in employment-based health insurance than expected by CBO and JCT might lower rather than raise the cost of the insurance coverage provisions of the ACA. * In CBO and JCT's judgment, a sharp decline in employment-based health insurance as a result of the ACA is unlikely and, if it occurred, would not dramatically increase the cost of the ACA.
CBO and JCT Estimate that About 3 Million to 5 Million Fewer People Will Obtain Employer-Based Coverage
Employers' decisions about offering employment-based health insurance under the ACA will be influenced heavily by the subsidies available to some people through insurance exchanges and
In the original analysis of the impact of the legislation, CBO and JCT estimated that, on balance, the number of people obtaining coverage through their employer would be about 3 million lower in 2019 under the legislation than under prior law. As reflected in CBO's latest baseline projections, the two agencies now anticipate that, because of the ACA, about 3 million to 5 million fewer people, on net, will obtain coverage through their employer each year from 2019 through 2022 than would have been the case under prior law.
Other analysts who have carefully modeled the nation's existing health insurance system and the changes in incentives for employers to offer insurance coverage created by the ACA have reached conclusions similar to those of CBO and JCT or have predicted smaller declines (or even gains) in employment-based coverage owing to the law. Surveys of employers regarding their plans for offering health insurance coverage in the future have uncertain value and offer conflicting findings. One piece of evidence that may be relevant is the experience in
Under Alternative Assumptions about Employers' Behavior, the Effects of the ACA on Both Insurance Coverage and the Federal Budget Differ from Those in the Baseline
If a firm chose not to offer insurance coverage under the ACA, some of its workers and their families might enroll in
With those cross currents, the net effect of a larger reduction in employment-based insurance coverage on the budgetary impact of the ACA depends crucially on the share of the workers and their families losing such coverage who are eligible for
In the four alternative scenarios examined, the ACA changes the number of people who will obtain health insurance coverage through their employer in 2019 by an amount that ranges from a reduction of 20 million to a gain of 3 million relative to what would have occurred otherwise. Compared with the
In contrast, the scenario with the largest reduction in employment-based coverage actually lowers the cost of the ACA to the federal government relative to the baseline projections because the extra costs for
TNS MJ88-120315-3807726 StaffFurigay
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