ACA's long-term impact on employer-sponsored plans

The Affordable Care Act's short-term impact on employer-sponsored health insurance has been minimal, but that could very well change over time, according to a policy paper from the Wharton School.

The federal and state insurance exchanges have enrolled nearly 11.7 million Americans, but that represents only a "small fraction" of the marketplace, noted Mark Pauly, Ph.D., a professor of healthcare management at Wharton.

In the long run, Pauly said the ACA will impact about 15 percent of the workforce. Whether companies opt to move workers from employer-sponsored plans to the exchanges will depend on the firm's size, its average salary and the degree of homogeneity among those salaries.

Large, high-wage firms have no incentive to shift from the status quo, Pauly said, as insurance options are better than what's offered on ACA exchanges and employees make too much money to qualify for subsidized coverage. Employers have found that it's more expensive to drop coverage than it is to continue providing coverage, FierceHealthPayer previously reported--largely because workers who lose employer-sponsored benefits expect a raise in return.

That said, large companies with a corresponding large salary disparity--assembly-line manufacturing, for example--may consider spinning low-wage workers into a separate firm and sending those employees to the exchanges for insurance, Pauly explained in an interview with [email protected]. It wouldn't be politically correct, he acknowledged, but it would save money for the firms and give employees a subsidy on their insurance as well.  

Small businesses, on the other hand, would most likely benefit from a switch to the exchanges--salaries are often homogeneous, Pauly said, while employees buying on the small group market often see "unappealing and volatile premiums."

He added: "[T]he additional subsidies available in exchanges will incentivize employers who were offering insurance to stop paying their part of the premium and instead pay the money as wages to let their employees seek better options through the exchanges."

However, implementation of small business health options program exchanges must improve in order for enrollment to pick up.

Pauly also said it's unlikely that, over time, firms coming with the employer mandate will cut full-time employees to part-time hours, as that places "serious limits on a firm's ability to manage."

For more:
read Pauly's paper and interview with [email protected]

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