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Employer coverage remains strong, even as ACA plans provide coverage

The Jan 1st 2014, launch of the Affordable Care Act (ACA) provided millions of previously uninsured Americans with vital healthcare coverage. But countless heated arguments have been directed at the law, both for and against. One of the most volatile matters was the issue of employer-sponsored policies, by far, the biggest source for the nations’ health insurance. The Congressional Budget Office (CBO) estimates that in 2016, 155 million Americans under the age of 65 are covered by their employers.

Many healthcare experts were predicting that the ACA would take away this coverage. Some businesses would have had to surrender their expensive plans, while others would eagerly jump at the chance. However, these grim forecasts were proven wrong, as the majority of businesses, even larger ones, retained their coverage. One reason was that health benefits hold great value as employee recruitment and retention tools, and also enable employers to qualify for large tax breaks. And, should this coverage be removed, employers’ bottom lines could suffer, as workers would expect pay raises to make up for the lost coverage; many would have even leave the companies completely.

Job-based plans’ popularity and funding rises

In its brief history, Obamacare has emerged as a success, allowing more than 17.6 million people to sign up for health insurance plans, regardless of pre-existing conditions. As a result, the national uninsured rate has fallen to below 10 percent. But Obamacare is only part of the American healthcare system. The role of employer-sponsored coverage shouldn’t be minimized, as it provides the majority of the nation’s 18-65 population with insurance.

In fact, research suggests that job-based plans are stronger than ever. In a March 21, 2016, study, the nonprofit Kaiser Family Foundation (KFF) stated that over the last five years, the number of adults under 65 with employer-based coverage has remained stable; this finding comes after years of steady decline since 1999.  “The demise of employer-based coverage was definitely overstated,” said Michael Thompson, the chief executive of the National Business Coalition on Health, an organization for employers and other insurance buyers.

A 2016 report compiled by both the CBO, the federal agency responsible for healthcare spending, and the nonpartisan Joint Committee on Taxation (JCT), which is concerned with Congressional tax legislation, showed just how far-reaching these plans are. The agencies found that about 244 million noninstitutionalized U.S. residents under age 65 are insured in 2016; this breaks down as.

  • Almost 155 million people (about 2/3 of those under 65) have employer-sponsored coverage. By 2019, this number should decline to 152 million in 2019 and remain stable through 2026. At that time, roughly 54 percent will be enrolled in employment-based coverage.
  • About 62 million are enrolled in Medicaid, insurance for poor individuals and families, while 6 million are enrolled in the Children’s Health Insurance Program (CHIP), which provides coverage for children’ health needs. By 2026, Medicaid enrollment is set to hit 69 million, while CHIP enrollment will fall to 2 million.
  • About 22 million have nongroup (individual) coverage purchased through or outside one of the ACA’s health insurance marketplaces (exchanges).
  • For Medicare, while most members are 65 years or older, about 9 million people under 65 receive coverage; this figure should remain stable through 2026.
  • Other sources, including student health plans, foreign sources and the Indian Health Service, are expected to provide coverage for 5-6 million people through 2026.

The CBO says that in total, insured Americans between 18 and 65 qualify for more than $600 billion in federal subsidies for health insurance; $266 billion goes toward employer-based plans alone. As for the uninsured, on average, 10 percent (about 27 million people under age 65) will have no coverage through 2016. This number is expected to increase from 26 million to 28 million; however, those under 65 years without insurance should remain at about 10 percent.

Motivation for employers

Another factor expected to remain stable is the availability and variety of insurance carriers for workers. Large companies, like Anthem and BlueCross Blue Shield will still be the leaders in plan. Even with Obamacare allowing consumers to select a wider variety of plan options, employers have found that their workers are satisfied with their job-based options. And, they realize job-based plans are a prized incentive for employees. However, as the ACA forbids workers from being denied insurance because of poor health, employers may be more inclined to drop their coverage.

Even so, under the ACA, companies not offering coverage are penalized, at a rate of about $2,000 per worker. And while this is less than the average cost of family coverage — $12,600 a year – companies also receive impressive tax breaks for providing coverage. And once health plans are taken away, the employees would demand larger paychecks in their place. Not surprisingly, multiple businesses, including smaller companies and those employing low-income workers qualifying for subsidies, are considering transferring their workers to the ACA marketplaces.

Small businesses have seen the largest coverage drops, although these plans have been steadily falling even before the ACA. According to the KFF, those small employers offering health benefits decreased from 2010’s 68 percent to 2015’s 56 percent. However, these decreases may be ending; in 2013, up to 20 percent of employers with fewer than 500 workers reported being likely to drop coverage in the next five years, compared with 7 percent today. Much of these drops may have been related to earlier problems with the ACA’s insurance marketplace ( But for now, the CBO expects stability within the employer market through 2026.