Who leaves employer-sponsored insurance on the table?

The Kaiser Family Foundation's latest estimate of the still-uninsured population in the U.S. includes about 4.8 million whose employers offer health insurance that they decline to buy.

Some are locked out by the ACA's so-called "family glitch," which denies marketplace subsidies to those for whom an employer's insurance offering would cost less than 9.5% of income for individual coverage, even if the family coverage offered by the employer costs far more than that. But many low income workers find even individual employer-sponsored insurance (ESI) unaffordable. Probably the bulk of Kaiser's estimated 4.8 million who forgo ESI could do well in the ACA marketplace if the ESI offer didn't disqualify them from subsidies.

The New York Times' Stacy Cowley has a good story that spotlights the plight of those who can't afford insurance offered by their employers:

How conservatives might amend (rather than destroy) the ACA

The Affordable Care Act is by any rational assessment a conservative plan to expand access to healthcare -- relying in large part on private insurance and competition, devolving oversight and insurance industry supervision to the states, and imposing fiscal 'responsibility' on individuals with incomes as low as 138% of the Federal Poverty Level to contribute to the cost of their healthcare.

Yet conservatives complain bitterly that the private market is not free (i.e., to exclude benefits now deemed 'essential'); that the states are commanded to administer within a federal straitjacket; that the employer mandate will choke off job growth; and that the individual mandate is an unconstitutional impingement on personal liberty.

Looking back at a year of blogging about the ACA's increasingly successful implementation, it occurs to me that I've addressed three possible changes to the law that could reasonably be called conservative. Two increase viable consumer choice within the exchanges; one takes seriously the possibility of replacing the individual mandate, and one would loosen or perhaps partially replace the employer mandate.

Here they are:

Employers, HSAs and the ACA

Jay Hancock at Kaiser Health News reports that significant numbers of small businesses may stop offering health insurance to their employees, sending them instead to the ACA exchanges. This could be a good thing for employees who earn little enough to qualify for strong ACA subsidies -- win-win for employer and employee at the federal government's expense.

According to the Kaiser Family Foundation, small employers in 2014 paid an average of nearly $5,000 for solo coverage and a bit more $10,000 for a family premium. What if an employer wants to compensate employees for dropping a benefit that constitutes such a large share of their compensation?  There's a problem with straight salary increases: they reduce employees' ACA subsidies and so give a portion of the extra income back. At healthinsurance.org, I examine three scenarios in which a pay hike worth about 70% of a typical employer premium contribution triggers subsidy reductions ranging roughly from about 25-- 80%.

An employer who really wants to help employees can avoid this problem by getting creative about compensation.  One striking way to do so would be to fully fund Health Savings Accounts (HSAs) that employees can use with HSA-qualified plans on the exchanges. Here's how I described the possibility in the healthinsurance.org piece:

In December 2008, support for ACA linchpins was broad and shallow

As the Affordable Care Act's first open enrollment season wraps up with a major surge, the law's implementation remains as polarized as public opinion and party rhetoric. States that ran their own exchanges and accepted the Medicaid expansion reduced their uninsured populations by three times as much as states that abstained on both counts, according to Gallup polling. California and Connecticut reached 175% of the CBO's projection for first-year private plan signups; Oklahoma, just 28%, according to Charles Gaba's spreadsheet. Meanwhile, as Obama declared, "the repeal debate is and should be over” and “the Affordable Care Act is working," Republicans geared up once again to make repeal and denigration of the law the centerpiece of their election strategy.

At this juncture, after five years of political mortal combat, it's instructive to look back at Americans' reactions when first confronted with the proposed core provisions of the ACA. The Kaiser Family Foundation probed opinions about those measures back in December 2008, polling over 1600 adults (thanks, Larry Levitt). By that point, the prospective law's outlines were clear, as all three Democratic candidates had proposed similar healthcare reform plans.

At first blush, respondents were enthusiastic about the mechanisms for expanding private-market health insurance: requiring employers to cover employees, and requiring individuals to buy affordable coverage. When asked to consider potential consequences of those mandates, however, respondents turned ambivalent.  The poll results might have been read to provide cover to Democrats to move forward. But they also pointed to multiple entry points for Republicans to exploit the pending legislation's tough tradeoffs.

Take two: Employers want to provide health insurance

Perhaps I buried my lede a bit yesterday in a post about the ACA's employer mandate. So let me try a carve-out.

Josh Barro, taking at face value some bitching about the requirement that employers with more than 50 full-time employees offer health insurance to their employees, recently charged that the mandate is a mistake and that health reform should have pushed health insurance away from the employer-employee relationship.

Defensible as that diagnosis may be in the abstract, voters at large were not the only constituency resistant to weakening the employer-healthcare bond.  Big businesses, and a not inconsiderable number of small businesses, values their role as health insurer, seeing that role as an important part of their bond with employees, as a competitive advantage, and increasingly, as an opportunity to make their workforce more productive  -- not to mention as font of a tax-free form of compensation.

Call them crazy, as Matt Miller did in October 2009 when the National Coalition on Benefits, an association purporting to represent the interests of employers covering 130 million Americans in the health reform process, helped to shoot down Senator Ron Wyden's Free Choice Amendment, which would have enabled all employees to opt out of their employer's health care plan and buy insurance on the insurance exchanges established by what later became the Affordable Care Act. The group's motto: Don't Erode What Works to Fix What's Broken. *

U.S. employers want to provide health insurance

The Wall Street Journal has a good article today, by small business reporters Emily Maltby and Sarah Needleman, about three smallish businesses grappling with the the Affordable Care Act's employer mandate, which charges employers with more than 50 employees $2,000 per employee (excluding the first 30) if they don't offer coverage.  None of the business owners opt not to offer coverage. Here's the head of a small pizza chain with 90 hourly workers:

Next year, Mr. Stark intends to offer a health-insurance plan for the first time to comply with the law. "At the end of the day, if we take care of our team members, they will take care of the guests," he says. "I philosophically believe people having health care, regardless of age, is positive."

A consultant with 93 employees adds: