Taking Cover(age): Offer and Take-up of Employer-Sponsored Insurance after the ACA

Abramowitz, Joelle; Abramowitz, Joelle

This paper investigates the effect of the rollout of the Patient Protection and Affordable Care Act (ACA) on the propensity of firms to offer insurance to their employees and the propensity of employees to take that insurance if it is offered using the 2014-2015 Current Population Survey Annual Social and Economic Supplement (CPS ASEC). There are many provisions of the ACA that could affect the offer and take-up of employer-sponsored insurance in different ways. The introduction of exchanges and subsidies as well as the expansion of Medicaid provide easier availability of coverage outside of employment and reduces firms’ incentives to offer health insurance to their employees. However, the individual mandate, which went into effect in 2014, may boost demand for employer-sponsored insurance. Further, the employer mandate, which was set to go into effect in 2014 but has been delayed until 2016, penalizes large firms that do not offer adequate and affordable coverage to their workers. Facilitating small firms’ purchase of health insurance, some small firms became eligible for tax credits beginning in 2010 and the Small Business Health Options Program (SHOP) marketplaces were introduced, accessible via a paper application as of October 2013 and online as of November 2014.

Given the expanded options and incentives introduced by the ACA, there has been extensive debate as to how the ACA would affect the offer and take-up of employer-sponsored insurance. First estimates suggest no significant effect of the ACA on the offer or take-up of employer-sponsored insurance from June 2013 to September 2014 (Blavin, et al. 2015). This analysis uses the CPS ASEC to examine rates of the offer and take-up of employer-sponsored insurance for early 2014 and early 2015. This period includes the end of the first open enrollment period for the public exchanges and captures changes during the rollout of the ACA as employees and employers respond to the laws in place and anticipate the impending employer mandate.

Considering employed working-age adults, we examine rates of the offer and take-up of employer-sponsored insurance. Since the individual provisions of the ACA are determined by income level and the employer provisions are determined by firm size, the analysis considers differential effects by these characteristics. To further understand the channels through which the ACA may affect the offer and take-up of employer-sponsored insurance, we examine changes in the reasons reported for why individuals were ineligible to enroll in employer-sponsored insurance or were eligible but chose not to enroll. Use of the unedited sample of the longitudinally linked CPS ASEC for 2014-2015 provides additional insight into the dynamics of the offer and take-up of employer-sponsored insurance.

Our results have important implications for evaluating the effects of the ACA. Comparing our estimates for the offer and take-up of employer-sponsored insurance to estimates of insurance take-up more generally provides a more complete picture of ACA implementation. Likewise, our results combined with policyholder information shed light on effects on families through employer-sponsored dependent coverage of spouses and children.

Association for Public Policy Analysis & Management

Panel Paper: Taking Cover(age): Offer and Take-up of Employer-Sponsored Insurance after the ACA