Tag Archives: Sarah Coates

How is the ACA’S health insurance coverage impacting employer plans?

Coates-SarahIn the shifting landscape of the Patient Protection and Affordable Care Act (ACA), where do employers currently stand, where are we headed—and what is it going to cost? In March, the Congressional Budget Office (CBO) published its Federal Subsidies for Health Insurance Coverage for People Under Age 65: 2016 to 2026, highlighting health insurance enrollment projections, subsidy amounts, and the impact of the ACA on health insurance. The report encompasses all types of coverage for those under 65; the following summary focuses mainly on the impacts associated with employer-based coverage.

The CBO and Joint Committee on Taxation (JCT) currently estimate that, in 2016, total federal subsidies, taxes, and penalties associated with health insurance coverage for those under 65 will result in a net subsidy from the federal government of $660 billion—3.6% of gross domestic product (GDP). This is expected to rise at an average annual rate of 5.4%, reaching $1.1 trillion (4.1% of GDP) in 2026.

The two major culprits in terms of costs are the federal subsidies associated with employment-based coverage, and federal spending for Medicaid and Children’s Health Insurance Program (CHIP) benefits. Respectively, they take up 41% and 43% of the total net subsidy for people under age 65.

Who is covered and how?
According to the report, healthcare coverage is more prevalent now than prior to the ACA.

• In 2016, of the total estimated population (272 million lives), approximately 155 million people are covered by employer-sponsored insurance.
• In 2026, of the total estimated population (280 million lives), the CBO estimates that approximately 152 million people will be covered through employer-sponsored plans.

Currently, the number of uninsured is approximately 27 million. This is expected to increase slightly to 28 million in 2026. According to the CBO report, if the ACA had not been enacted, the total number of uninsured would have been 49 million this year and would have reached 52 million by 2026.

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What are the ACA’s subsidies costing taxpayers?
The CBO and JCT have estimated the costs of federal subsidies associated with health insurance coverage for people under age 65. Shown below, these include the tax exclusion for employment-based coverage (of this, $1 billion per year is attributed to small-employer tax credits), and subsidies offered through healthcare marketplaces and related spending.

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Health insurance taxes and penalties are projected to reduce total subsidies by $15 billion in 2016 and to grow
to $59 billion in 2026:

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This article first appeared in the September 2016 issue of Health and Group Benefits News and Developments.

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Mid-market group medical plan trends

Based on an analysis conducted by Milliman’s Terry Bierman and Sarah Coates, the following three trends have emerged in mid-market group medical plans the last 10 years.

1. Consumer-driven health plans (CDHPs) have become more prevalent.
2. Changes in plan designs have shifted more out-of-pocket expenses to employees.
3. Premiums have outpaced inflation, but the percentage of that premium paid by employees electing single coverage has remained relatively constant.

To learn more about the development of these trends, read Bierman and Coates healthcare reform paper entitled “The changing employer-sponsored group medical plan.”