<!–:en–>CONGRESSIONAL BUDGET OFFICE REPORT SAYS NEW HEALTH CARE LAW NOT LIKELY TO CAUSE BIG DECLINE IN EMPLOYER COVERAGE<!–:–>March 17, 2012
According to a Congressional Budget Office (CBO) report released recently, the new health care law, the Patient Protection and Affordable Care Act or PPACA, is unlikely to cause a sharp decline in employer-based health insurance coverage.
CBO, in conjunction with the congressional Joint Committee on Taxation, projected that 3 million to 5 million fewer people would have employer-sponsored coverage from 2019 through 2022 as a result of the Patient Protection and Affordable Care Act than would have been the case without the law.
Most of those losing employer-sponsored coverage would obtain it through the health insurance exchanges created under the law or through Medicaid and the Children’s Health Insurance Program, although some may become uninsured, the analysis said.
But as many as 20 million individuals could lose their employer coverage, or up to 3 million more actually could gain such coverage, by 2019, depending on different scenarios presented on how employers will react to the law, according to the analysis, CBO and JCT’s Estimates on the Effects of the Affordable Care Act on the Number of People Obtaining Employment-Based Health Insurance.
CBO said it is too early to tell how employers will react to provisions in the health care law regarding providing coverage to workers. But the Massachusetts health care law, which is similar to PPACA, appears to have increased employment-based health insurance since its enactment, the analysis said.
If employers drop health care coverage, that would increase the cost of the health care law, CBO said. But those costs likely would be offset by higher tax revenue since employers would offer higher taxable wages in lieu of insurance coverage, it added.
The analysis examines the incentives for employers to offer or not offer health insurance under the law, as well as a range of estimates of sources of coverage and federal budgetary outcomes that would result from the law under alternative assumptions about employers’ behavior.
The analysis is a follow-up to a report released by CBO March 13 that estimated that the law would cost about $50 billion less than CBO said a year ago.
CBO in its March 15 analysis considered four alternative scenarios that could govern employer behavior under the health care law, other than the middle course they selected when estimating how many workers would lose coverage as a result of its implementation beginning in 2014.
CBO said the law is unlikely to cause employers to jettison coverage in a dramatic way because it leaves in place current financial incentives to provide coverage and creates others. But it added that “there is clearly a tremendous amount of uncertainty about how employers and employees will respond to the set of opportunities and incentives under that legislation.”
“In addition to the uncertainty surrounding employers’ and employees’ decisionmaking, there is uncertainty regarding many other factors, including the future growth rate of private insurance premiums and the number of individuals and families who will have income in the eligibility ranges for Medicaid, CHIP, and exchange subsidies,” the analysis said.
The cost of coverage to the federal government varies under the four scenarios, from a decrease of $82 billion over 11 years to an increase of $45 billion, CBO said. 03.17.2012