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Analysis: 65 Million People Could Lose Employer-Sponsored Coverage

May 08, 2012

This week, the Deloitte Center for Health Solutions highlighted an analysis conducted by the group last fall which found that up to 65 million Americans could lose their employer-sponsored health insurance because of ObamaCare’s employer mandate requirement.  The analysis noted that while employers of every size are affected, small- and mid-sized companies are the most likely to exit.  The Deloitte data reinforces findings from a staff report prepared for Ways and Means Committee Chairman Dave Camp (R-MI) that was released last week revealing the stark economic choice facing employers who could save hundreds of millions of dollars a year by simply terminating health insurance for their workers.   The report found that 71 Fortune 100 companies responding to the survey could save almost $30 billion in 2014 alone by eliminating employer-sponsored health plans and instead paying the employer mandate penalty.

The House of Representatives Ways and Means Committee released a report Tuesday concluding that the ACA employer “pay or play” provision will encourage employers to pay the penalty and drop coverage. The committee surveyed 71 Fortune 100 companies, and found the group would save $28.6 billion in 2014 by eliminating health insurance coverage, and paying the $2,000 penalty per full-time employee instead. The report says 84 percent of the responding employers expect their future health care costs will increase at rates that are greater than those they’ve experienced over the past five years.

Note: ACA Section 1513 requires employers with 50 or more full-time employees that do not offer health insurance coverage and have at least one full-time employee receiving a premium assistance tax credit going towards coverage in the exchange to pay $2,000 per full-time employee. In 2014, the monthly penalty assessed to employers who do not offer coverage will be equal to the number of full-time employees minus 30 multiplied by 1/12 of $2,000 for any applicable month. After 2014, the penalty payment amount would be indexed by a premium adjustment percentage for the calendar year.

In the Congressional Budget Office (CBO) analysis of ACA, it anticipated 4 million might lose coverage; in the Deloitte Center for Health Solutions’ analysis (The impact of health reform on insurance coverage: Projection scenarios over 10 years), we concluded a scenario exists where up to 65 million people could lose employer-sponsored coverage if costs are high, state health exchanges operational, and in certain industries—light manufacturing, retail, transportation, restaurant—competition for talent does not require benefits coverage. It is our conclusion that small- and mid-sized companies under 2,500 employe[e]s are the most likely to exit. The net impact of the loss of employer-sponsored insurance in the system is profound—increased enrollment in individual insurance plans sold in exchanges, increased enrollment in Medicaid, and increased bad debt for those who go without coverage and unable to pay their bills.

(Sources: House Ways and Means Committee, “Broken Promise: Why ObamaCare Will Force Americans to Lose the Health Care Coverage They Have and Like,” May 1, 2012)