GAO Finds Mixed Effects of PPACA on Employer Coverage

August 13, 2012 ( - Microsimulation models to estimate the effects of the Patient Protection and Affordable Care Act (PPACA) on employer-sponsored coverage generally predicted little change in prevalence in the near term.

However, results of employer surveys varied more widely, according to a Government Accountability Office (GAO) review.  

The five microsimulation study estimates ranged from a net decrease of 2.5% to a net increase of 2.7% in the total number of individuals with employer-sponsored coverage within the first two years of implementation of key PPACA provisions, affecting up to about four million individuals. Two of these studies also indicated that the majority of individuals losing employer-sponsored coverage would transition to other sources of coverage.   

In contrast to the microsimulation studies, which estimate the net effect on individuals, most employer surveys measure the percentage of employers that may drop coverage in response to PPACA. Among the 19 surveys, 16 reported estimates of employers dropping coverage for all employee types. Among these 16, 11 indicated that 10% or fewer employers were likely to drop coverage in the near term, but estimates ranged from 2% to 20%.   

Most surveys were of employers currently offering coverage and therefore did not also address whether other employers may begin to offer coverage in response to PPACA; however, three that did found that between 1% and 28% would begin offering coverage as a result of PPACA.

Longer-term predictions of prevalence of employer-sponsored coverage were fewer and more uncertain, and four microsimulation studies estimated that from about two million to six million fewer individuals would have employer-sponsored coverage in the absence of the individual mandate than with the mandate.  

Differences in key assumptions and consideration of PPACA provisions likely contributed to some variation among estimates from the five microsimulation studies and the 16 employer surveys, the GAO said. Variation among the microsimulation studies may have stemmed from differences in assumptions about employer and employee decisionmaking, the time frames of the estimates, and assessments of potential compliance with the individual mandate. Variation among the employer surveys may be related to differences in survey sampling techniques, the number and types of employer respondents, and the framing of survey questions.   

For example, some surveys used a random sampling methodology, allowing their results to be generalized across all employers, while others did not. Also, some referred to specific PPACA provisions or provided specific information about provisions to respondents, while others did not.  

Some of the 19 employer surveys indicated that PPACA may have a larger effect on small employers and certain populations, and may prompt some employers to change benefit designs. For example, four surveys found that smaller employers were more likely than others to stop offering health coverage in response to PPACA, and five found that employers in general were more likely to drop coverage for retirees than for all employees.   

Nine surveys also indicated that employers are considering key changes to benefit design, some of which may result in greater employee cost for health coverage.  

The GAO report can be downloaded from