Small Employers Pulling Back on Health Benefits Since ACA

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By Kristen Ricaurte Knebel

July 28 — Small businesses have been pumping the brakes on offering health benefits to their employees since 2009, according to new data from the Employee Benefit Research Institute.

“The fact is that small employers were less likely to offer these benefits to begin with,” Paul Fronstin, EBRI's director of health research and education program and author of the report, told Bloomberg BNA July 28. “While the ACA was designed to try to get more small employers to” offer health insurance, “it hasn’t.”

The proportion of employers offering health benefits fell between 2008 and 2015 for all three categories of small employer, EBRI found: by 36 percent for those with fewer than 10 employees, by 26 percent for those with 10 to 24 workers and by 10 percent for those with 25 to 99 workers.

Some of the possible reasons for the decline include actual and expected health-care cost increases and an increased availability of insurance through the Affordable Care Act's health insurance marketplace, said the report, released July 28.

Better Options

There was concern before the ACA passed that all employers would rush to drop coverage, but the opposite proved to be true for some large employers, Mike Thompson, president and chief executive officer of the National Business Coalition on Health, told Bloomberg BNA on July 28.

But the “economics” of offering health coverage are different for small employers, he said.

“Their employees have better access to coverage on their own than they did before ACA,” Thompson said. In addition, employers with fewer than 50 employees aren't subject to the law's employer shared-responsibility provisions, meaning there aren't many roadblocks to discontinuing offering coverage, he said. Under those provisions, also known as the employer mandate, larger employers must offer coverage that meets ACA affordability and minimum-value coverage standards or potentially face penalties.

There is also the possibility that employees of small businesses will have access to subsidies if they get health coverage through the marketplaces. All of that added together means that small employers might feel more comfortable letting their employees obtain their own coverage, he said.

Large Employers Holding Steady

Larger employers are still offering health benefits at largely the same rate as before the ACA. More than 95 percent of those with 100 or more employees offered health coverage before the enactment of the law and continue to do so, EBRI said.

“There’s been no abandonment by large employers. If anything, it’s the opposite. They’ve really tried to dig in and invest more on this,” Fronstin said.

Still, under the right conditions, large employers also might rethink their offerings, he said.

“If there’s a recession, all bets are off. It’s never been put to the test. There’s never been a recession during a time period when there was an alternative to employment-based coverage,” Fronstin said.

Steve Wojcik, vice president of public policy at the National Business Group on Health, had a different take. He told Bloomberg BNA on July 28 that employer confidence that they will still be providing health coverage to employees in 10 years has increased.

If there were to be another economic downturn, Wojcik said, there could be a decrease in coverage, but he doesn't think it would be because employers stop offering the benefit.

“I think employers would continue offering coverage because it's valued,” but they might look at different ways to reduce costs or change the benefits they offer, Wojcik said.

To contact the reporter on this story: Kristen Ricaurte Knebel in Washington at kknebel@bna.com

To contact the editor responsible for this story: Jo-el J. Meyer at jmeyer@bna.com

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