ACA Will Decrease Number Using Employer Health Insurance

March 15, 2012 ( – New estimates indicate the health care reform law will result in fewer Americans using employment-based health insurance.

The Congressional Budget Office (CBO) and Joint Committee on Taxations (JCT) now estimate that, because of the Affordable Care Act (ACA), approximately three million to five million fewer people, on net, will obtain coverage through their employer each year from 2019 through 2022 than would have been the case under the prior law. The projected change in the number of people with employment-based insurance is the net result of several shifts in coverage, according to a CBO report.  

For 2019, CBO and JCT estimate a net decline of five million in the number of people obtaining coverage through their employer, as a result of the following changes: 

  • About 11 million people who would have had an offer of employment-based coverage under the prior law will not have an offer under the ACA. That estimate represents about 7% of the roughly 161 million people projected to have employment-based coverage under the prior law. The businesses that choose not to offer coverage as a result of the ACA will tend to be smaller employers and employers with predominantly lower-wage workers; those workers and their families are more likely to be eligible for Medicaid, CHIP or subsidies through the health insurance exchanges. 
  • Another three million people who would have had employment-based insurance under the prior law and will still have an offer of such coverage under the ACA will instead choose to obtain coverage from another source. Under the legislation, workers with an offer of employment-based coverage will generally be ineligible for exchange subsidies, but that “firewall” will presumably be enforced imperfectly, and an explicit exception to it will be made for workers whose offer of employment-based coverage is deemed unaffordable. 
  • About nine million people who would not have been covered by an employment-based plan under the prior law will have that coverage under the ACA. That change reflects the combined impact of the insurance mandate, the penalties that will be imposed on employers who do not offer insurance, and the tax credits for certain small employers who provide insurance for their workers—which will lead some employers who would not have offered coverage in the absence of the ACA to offer it and will lead some people who would not have taken up their employer’s offer of insurance to do so. 

The report says the estimates reflect CBO and JCT’s assessment of employers’ and employees’ responses to the set of opportunities and incentives under the ACA. In particular, they reflect the view that workers generally want to obtain health insurance coverage at the lowest possible cost—taking into account both the price charged and any tax effects or government subsidies that apply—adjusted for differences in the scope of coverage, out-of-pocket payments, access to health care providers, and other features of insurance coverage.    

On the basis of both economic theory and empirical evidence, CBO and JCT also think that employers generally construct compensation packages to attract the best available workers at the lowest possible cost. “The fact that many firms currently offer health insurance coverage to their workers despite the high cost of premiums and rapid growth in those premiums for many years shows that many firms continue to find health insurance coverage to be a worthwhile element of their compensation packages,” the report says.  

The report is available at