GAO: estimates on post-ACA decline in employer-provided coverage vary

Researchers believe that certain provisions of the Patient Protection and Affordable Care Act (ACA) could affect employers’ future willingness to offer coverage, according to a new report from the Government Accountability Office (GAO), but as yet little consensus exists as to what the future holds for employer-provided coverage.

As noted in the report, Patient Protection and Affordable Care Act: Estimates of the Effect on the Prevalence of Employer-Sponsored Health Coverage (GAO-12-768), ACA provisions that could affect employer-sponsored coverage include the individual mandate, the establishment of health insurance exchanges, group market reforms, and the “Cadillac” tax.

Tasked with a review of the "research" on this topic, the GAO examined two types of data. First, it reviewed five microsimulation model studies (those which estimate the combined effects of multiple ACA provisions, based on multiple data sets and assumptions) Second, it consulted 19 employer surveys published between Jan. 1, 2009, and March 30, 2012. In both instances, GAO examined (1) estimates of the effect of the ACA on the extent of employer-sponsored coverage; (2) factors that may contribute to the variation in estimates; and (3) how estimates of coverage vary by the types of employers and employees that may be affected, as well as other changes employers may be considering to the health benefits they offer.


Microsimulation models. The GAO found that the microsimulation model studies generally predicted little change in prevalence of employer-sponsored coverage in the near term. The five microsimulation study estimates ranged from a net decrease of 2.5 percent to a net increase of 2.7 percent in the total number of individuals with employer-sponsored coverage within the first two years of implementation of key ACA provisions, affecting up to about 4 million individuals. Two of these studies also indicated that the majority of individuals losing employer-sponsored coverage would transition to other sources of coverage, the GAO noted.

Employer surveys. Among the 19 employer surveys examined, 16 reported estimates of employers dropping coverage for all employee types. Among these 16, 11 indicated that 10 percent or fewer employers were likely to drop coverage in the near term, but estimates ranged from 2 to 20 percent. Most surveys were of employers currently offering coverage and therefore did not also address whether other employers may begin to offer coverage in response to the ACA; however, the three that did found that between 1 percent and 28 percent would begin offering coverage as a result of the ACA.

Some of the 19 employer surveys indicated that the ACA may have a larger effect on small employers and certain populations and may prompt some employers to change benefit designs, according to the GAO. For example, four surveys found that smaller employers were more likely than other employers to stop offering health coverage in response to the ACA, and five found that employers in general were more likely to drop coverage for retirees than for all employees. Nine surveys also indicated that employers are considering key changes to benefit design, some of which may result in greater employee cost for health coverage.