Tuesday, July 7, 2015

Will Obamacare spell the end of employer health coverage?

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Will Obamacare spell the end of employer health coverage?

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Some opponents predict that companies will start dropping coverage when insurance exchanges begin operating in 2014 (assuming health reform is not overturned by the Supreme Court or repealed in the meantime). With individual policies available through these new markets along with subsidies for those with low incomes, large numbers of employers could leave workers to fend for themselves.

But Obamacare can’t launch the decline of employment-based based health insurance. It’s already been going on for over a decade.

The Employee Benefits Research Institute, a nonprofit consulting organization, analyzed trends in coverage between 1997 and 2010. It found that the percentage of workers who were offered health coverage dropped from 70.1 percent to 67.5 percent. The percentage of all Americans who actually had employment-based coverage shrank from 60.3 percent to 56.5 percent.

Among those who were offered coverage but declined it, a growing number cited cost as the reason. The percentage rose from 23.2 percent to 29.1 percent.

The fall-off in companies offering health coverage has been most pronounced for small firms, those with fewer than 25 employees. However, the trend is also evident among larger companies that have more than 100 workers. The shift has not been large, but it has been steady.

Clearly, then, health reform health reform did not spark the drop in employment coverage rates. But could it cause the trend to accelerate?

Some believe that the decline in employer coverage means that fewer workers have come to expect this benefit. That will make it easier for employers to drop it when the law fully kicks in starting in 2014.

It is likely that health reform could, indeed, tip the balance for some companies. They will be able to drop coverage knowing that their workers won’t be left high and dry.

However, a large number of companies will be motivated to offer coverage by the same force that motivates them today – competition for workers. Health insurance will remain an attractive benefit in recruiting and retaining employees.

What about the workers who have already lost coverage over the past decade? Their numbers are almost certain to grow whether or not health reform goes into effect.

EBRI found that in 2010, half of those without access to employer-based insurance had no alternative coverage and ended up uninsured. They are joined by the growing number who are offered insurance but become uninsured because they can’t afford it.

More Americans will fall into these groups in the years ahead, with or without health reform. They will include many who never imagined they would have to go without health coverage.

If health reform proceeds, these Americans won’t face the prospect of becoming uninsured if their employer coverage ends. The law guarantees them access to a policy regardless of their health status.

That’s a safety net very few people could afford to be without. Its demise would place large numbers of us at risk.

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Check Up covers regional health news and a wide array of healthcare topics from pharmaceutical happenings to patient safety. Read about some of our bloggers here.

Portions of this blog may also be found in the Inquirer's Sunday Health Section.

Robert I. Field, Ph.D., J.D., M.P.H. Professor, School of Law & Drexel School of Public Health
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