A new Avalere study gives Democrats more ammunition against their claims that the McKinsey survey, which reported that a third of employers will soon be dropping health coverage for employees due to Obamacare, is an “outlier.”
The Avalere Health report, called “The Affordable Care Act’s Impact on Employer Sponsored Insurance: A Look at the Microsimulation Models and Other Analyses,” concluded that large employers are unlikely to stop offering coverage in the near-term as the benefit to dropping coverage might not outweigh the costs for both the employer and their employees.
“Overall, our analysis suggests that the ESI market will be fairly stable after 2014 when key ACA coverage provisions go into effect,” the report says. “The microsimulation models estimates from RAND, the Urban Institute, the Lewin Group and the Congressional Budget Office show net changes to ESI ranging from negative 0.3 percent to positive 8.4 percent compared to baseline projections without ACA implementation – not major changes in the market.”
However, the study suggests employers might rethink coverage after seeing the ACA go into effect.
“While it is possible the ACA could create strong incentives for change, the extent to which it does largely depends on the viability and operating details of the exchanges, and the relative value of plans offered in the exchanges,” the report says.
The report indicated more changes in ESI rates could occur after 10 years as many large employers take a “wait and see” approach with health reform, making long-term large employer actions difficult to predict.
“While near-term changes in aggregate ESI rates are unlikely, longer term erosion—over 10 to 20 years— is possible,” the report stated. That would be made even more probable if the state insurance exchanges called for in the law prove to be a better value than employer-sponsored coverage.
Also, the report cautioned that low-wage workers, small businesses and those with early retirees in particular are likely to turn to the exchanges for their coverage.