Employer-Sponsored Insurance Under Health Reform: Reports of its Demise are Premature

Abstract

Some have argued that the Patient Protection and Affordable Care Act would erode employer-sponsored insurance (ESI) by providing incentives for employers to stop offering coverage. Others have claimed that most businesses would face increased costs as a result of reform. This study finds that overall ESI coverage under the ACA would not differ significantly from what coverage would be without reform. We estimate the average employer contribution per person covered by ESI would decrease by nearly 8 percent for small firms and would decrease slightly for larger firms. Total employer health care spending would be 0.6 percent lower under the ACA. We discuss several reasons why predictions of large declines in employer sponsored coverage are likely exaggerated.

Keywords: Employer, Sponsored, Coverage, Insurance, Health, Reform, PPACA, Patient, Protection, Affordable, Care, Act

JEL Classification: J11, J32