By Jane Norman, CQ HealthBeat Associate Editor
June 21, 2011 --The share of Americans with employer-sponsored insurance dropped from 69 percent in 1999-2000 to 61 percent in 2008-2009. But the health care law might counter that trend among the nation's smallest businesses, a pair of recently issued reports said.
The new analyses were released by the Robert Wood Johnson Foundation. They came as a series of other studies by various groups have offered conflicting pictures of the future of employer-sponsored policies, which have been regarded as a staple at most large companies. Democratic backers of the health care overhaul law have been fighting a survey by McKinsey & Co. consultants that predicted major drops in employer coverage when the law (PL 111-148, PL 111-152) took effect.
Under pressure from the White House, Democratic lawmakers and others, McKinsey released details of its questionnaire and survey results. But that brought about more criticism from Democrats who said the questions were slanted and that the original report made the survey sound more scientific than it was.
Nonetheless, most of the reports have something in common: They caution that a great deal of uncertainty surrounds employer behavior when the health care system changes significantly in 2014, the year all provisions of the law take effect. And it may take a few years for it all to shake out, the reports say. A report issued by Avalere Health even cautioned that there may be a "me too" effect among employers who watch to see what others are doing.
The furor illustrates the tension around the long-running question of whether U.S. health care will remain centered around employers or shift to the state-based exchanges. If there are big changes, it might be a political problem for Democrats who said people could keep the health care coverage they have.
The study by the State Health Access Data Assistance Center at the University of Minnesota looked at the decade-long decline in employer-sponsored coverage for non-elderly people and said it occurred across all income levels, though half came in moderate-income families of four earning from $44,000 to $88,000.
The percentage of employers that offer insurance has declined, and so has employee "take up" of coverage when it's offered—with increasing premiums the likely major factor. Premiums are much higher for families than single people, and much of the decline in employer-sponsored insurance was among those who are dependents of an employed relative.
The erosion of employer insurance was found across all states, though in 12 states it declined 10 percent or more: Arizona, Arkansas, Indiana, Michigan, Minnesota, Mississippi, Missouri, North Carolina, Ohio, Rhode Island, Tennessee and Texas. It's important to monitor trends in employer coverage at the state level because states will have a lot of flexibility in how they implement the health care law, the report authors said.
The second report, prepared by the Urban Institute, focused on small businesses. In it, economic models predicted that the percentage of companies with fewer than 100 workers that offer health insurance would increase under the health care law, from 43.4 percent to 47.6 percent.
The largest increase would be in the smallest companies—those with fewer than 10 employees—that also are not subject to the employer mandate in the law and thus don't face possible penalties for not offering insurance, the report said. That's combined with projected cost savings in the price of insurance, in some cases tax credits and the ability of an employer to shop for better coverage in the small-business exchange.
Overall, a small increase in coverage is expected in firms with fewer than 50 workers, while coverage in larger firms—those with more than 50 workers—is expected to stay about the same, the models showed. While the gains are not as strong as for small firms, "they are also not consistent with more negative predictions suggesting a virtual collapse of employer health insurance," said the study.
As for costs, the study predicts an 8.6 percent decrease in employer health costs under the new law for all firms with under 100 workers; a 12 percent decrease for those with under 50 workers; and a 1.2 percent increase for those with 50 to 99 employees.
Linda Blumberg, a senior fellow at the Urban Institute, said that researchers wanted to focus on small businesses since they traditionally have been the least likely to offer health insurance and also have many low-wage employees.
Blumberg also said that the studies assumed full implementation of the law in 2010 and did not look at trends over the long term.