Last week, the Urban Institute released a new study on employer-sponsored health insurance rates, finding they’ve remained steady under the Affordable Care Act (ACA). This study is yet another blow against the law’s harshest critics, who insisted it would force employers to drop coverage for employees.
Prior to the passage of the health care law, our health insurance system was spiraling out of control, and small businesses were paying the price. A study by the President’s Council of Economic Advisors found that small businesses have paid on average 18 percent more for health insurance than large companies in the past. This problem was only getting worse – an economic analysis from Small Business Majority found that without reform, small businesses’ health insurance costs would more than double to $2.4 trillion by 2018, causing the loss of 178,000 small business jobs.
Despite the obvious need for reform, critics pushed back hard against the new health care law. Opponents made dire predictions about its effects; chief among them was an allegation that the new health care law would force employers to drop coverage, leaving workers to secure insurance on their own.
But new data from the Urban Institute proves these critics wrong: the percentage of workers offered employer-sponsored health insurance has remained virtually unchanged under the new health care law. The Urban Institute found 82.3 percent of workers reported being offered coverage in June 2013, before the law’s implementation, compared to 83 percent in March 2015. Additionally, 60.3 percent of all adults ages 18-64 had employer-sponsored coverage in March 2015, compared with 59.7 percent in June 2013. The study predicts that these rates will remain stable in coming years thanks to factors including tax credits for smaller firms and for workers who obtain coverage through employers.
These numbers are a clear indicator that companies aren’t dropping their health insurance, as critics threatened. And it’s not the only empirical evidence suggesting that the law is working as intended. For instance, a survey conducted by Towers Watson and the National Business Group on Health found that in 2013, employers experienced the lowest increase in health care costs in 15 years. The new law has also begun eliminating job lock, which occurs when employees are trapped in jobs because they can’t risk losing coverage. The Robert Wood Johnson Foundation estimated that an additional 1.5 million people would start their own businesses in 2014 because of the health care law.
Of course, these findings shouldn’t be a surprise, especially regarding small employers. Small Business Majority’s scientific opinion polling found several early indicators that the law wouldn’t adversely impact small businesses’ willingness to provide employees coverage. For instance, our opinion polling found two-thirds of small business owners would consider using the state insurance exchanges created by the new law. Similarly, our research in California found that the law would encourage a 12 percent increase in California small businesses offering health insurance to employees.
Of course, the law isn’t perfect. Changes should be made, such as simplification and expansion of the small business health care tax credit, improvements to the Small Business Health Options Program (SHOP) marketplaces and the adoption of health care tax equity for the self-employed. Additionally, we must continue outreach around the law to ensure that small business owners are able to take advantage of what it has to offer.
The bottom line, though, is that the law is a step in the right direction. We needed reform, and we got it – and that’s good news for our small businesses and our economy.