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Obamacare plans increase, as employer-sponsored coverage drops

As the latest reports show, the most recent Open Enrollment Period (OEP), which ended on Jan. 31, 2016, saw 12.7 million Americans sign up for health insurance policies under the Affordable Care Act (ACA). This latest OEP represents an increase of one million people (8.5 percent more) over the previous year. Since the healthcare law’s passage on Jan. 1, 2014, more than 17.6 million have enrolled in ACA-compliant coverage, bringing the nation’s uninsured rate down below 10 percent. In addition, Obamacare has succeeded in expanding Medicaid coverage, while enabling those 26 years and younger to remain on their parents’ plans, ensuring vital health coverage.

However, the ACA may be playing a large role in the downfall of employer-sponsored health plans. Research suggests that over the next decade, millions of workers may drop these policies, whether voluntarily or not. It’s true that some of these plans will have folded on their own, due to rising healthcare cost and retiring employees. This isn’t necessarily bad news, though, as many workers may opt for Obamacare coverage. And of course, a great number will be eligible for Medicare, as they approach the age of 65.

The changing face of workers’ health plans

Currently, employer-sponsored health insurance plans make up the majority of the American population. On March 24, 2016, the Congressional Budget Office (CBO), the federal agency charged with healthcare spending and related policies, released a report detailing the nation’s insurance coverage. The report, “Federal Subsidies for Health Insurance Coverage for People Under Age 65: 2016 to 2026,” showed that in 2016, about155 million Americans are enrolled in employer-sponsored plans.

Of these, an estimated 57 percent are under 65 years old. However, this number is expected to fall, with projections showing that in 2019, there will be 152 million insured. That number should remain stable through 2026; at that point, about 54 percent of those under 65 will be insured by employers. But in terms of healthcare costs, the CBO explained that these have been increasing, even before the ACA was established.

The agency says that in 2016, $660 billion in taxes will go toward subsidizing insurance coverage for people under 65, most receiving coverage through their employers. The CBO said that employer-sponsored coverage is actually one of the most expensive health insurance programs (tying with Medicaid), with cost projections of $3.7 billion over the next decade. This amount represents 3.6 percent of the entire U.S. gross domestic product (GDP), including: employer-sponsored insurance’s federal tax exclusion, Medicaid programs (insurance plans for poor individuals and families) and Obamacare plan tax credits and subsidies.

The financial benefits of Obamacare

Overall, the CBO states that healthcare subsidy costs should grow, on average, by 5.4 percent over the next decade; in 2026, they’re forecast to reach $1.1 trillion (4.1 percent of GDP). With so much funding going toward this coverage — especially that for Medicare and Medicaid – healthcare costs stand out as a potential target for deficit reduction. The CBO found that 40 percent of 2016’s health coverage subsidies (about $268 billion) go toward: 1.) small employers’ tax breaks and 2.) the exclusion for employer-based health insurance plans. Meanwhile, Medicaid and the Children’s Health Insurance Program (CHIP), which provides coverage for about 68 million low-income Americans, receive $279 billion in subsidies.

In this regard, the ACA is a less-expensive healthcare alternative. The healthcare law should account for $110 billion in subsidies, while providing 23 million people with coverage. But the CBO states that through 2019, the ACA will cost $157 billion; this is 25 percent less than 2010’s original estimates (before the law’s passage). Since its inception on Jan. 1, 2014, more than 17.6 million people have enrolled in plans; this has led to the nation’s uninsured rate falling below 10 percent. But due to the higher-than-expected Medicaid enrollment numbers, these costs will actually increase to $136 billion over the next decade.

So while the ACA’s impact is clearly having an effect on employer-sponsored plans, workers may have several options available for coverage. They could sign up for an ACA-compliant or Medicaid policy. And with millions reaching the age of 65 every year, Medicare enrollment will be skyrocketing. Research suggests that by 2030, enrollment will reach an estimated 80 million.