Expanded Eligibility Had Little Impact on Health Care Enrollment

Though they had to offer health coverage to a larger group of employees this year, most employers did not see a big increase in enrollment.

The new eligibility requirements mandated by the Patient Protection and Affordable Care Act (ACA) had very little impact on enrollment in employer-sponsored plans in 2015, according to a survey from Mercer.

“Employers that had to offer coverage to more employees were braced for a bump in enrollment this year, but they didn’t know how big it would be,” says Tracy Watts, a senior partner and leader for health reform at Mercer. “While some did see increases, for the most part it seems the newly eligible either had coverage through a parent’s or spouse’s plan or through Medicaid—or are continuing to go bare.”

The ACA requires employers to offer substantial coverage to the majority of employees who work 30 hours or more. While there was a 1.6% increase in the absolute number of employees enrolled, that was the result of a 2.2% increase in the size of the workforce, rather than the changes required by the ACA, Mercer found.

According to “Health Care Reform Five Years In,” a survey of nearly 600 employers conducted last month by Mercer, across all employers in the survey, the average percentage of employees who were eligible for coverage rose one percentage point, from 87% to 88%, but the average percentage of eligible employees who enrolled dropped a point, from 84% to 83%. That left the average percentage of all employees (both eligible and ineligible) who enrolled in 2015 essentially unchanged from 2014, at 74%.

Mercer’s survey found that most respondents—81%—felt they were already in compliance with the eligibility requirement prior to 2015. And among those employers that did extend coverage to more employees, many found that few of the newly eligible chose to enroll. 

While the individual mandate may have inspired some employees to enroll for the first time, other factors may have drawn employees out of employer plans. While 18% of all respondents (and 31% of those with 5,000 or more employees) believe that more employees elected coverage than in past years due to the individual mandate, 7% of all respondents (and 14% of those with 5,000 or more employees) believe some former enrollees now waive coverage because they are eligible for expanded Medicaid. 

Additionally, some employers took steps to hold down enrollment growth. This included reducing hours of at least some employees who consistently worked 30 or more hours per week so that they did not become eligible for coverage or keeping new hires to less than 30 hours per week. However, very few respondents—just 2%—said they cut staff to avoid covering more employees.

Among respondents in food and lodging businesses, the industry sector most affected by the 30-hours rule due to high concentrations of part-time workers, the average percentage of employees eligible for coverage rose from 57% to 60%. But overall growth in the percentage of employees enrolled rose by less than one percentage point, to 34%. 

Still, for some employers, enrollment did grow. For one in ten employers in the survey, the percentage of their workforce enrolled in a health plan rose by 5% or more from 2014 to 2015. But, given the number of respondents with no growth or even a decrease in the percentage of employees enrolled, this wasn’t enough to move the needle overall, Mercer says.