ObamaCare and Employer-based Benefits
Now that we have over one full year of ObamaCare under our belts, a mystery is unfolding: What is happening to employer-based benefits? Data from different sources convey widely different messages, but until we solve this mystery, it is difficult to predict the political future of President Obama’s troubled health reform law.
The puzzle is obscured by the media’s focus on topline figures, which indicate significant increases in the number of insured people, including millions added to Medicaid, the joint state-federal program for low-income households. In truth, it is inappropriate to categorize Medicaid dependents as “insured” -- for the same reason it is inappropriate to consider jobless people who receive cash welfare benefits as “employed.” The fiscal difference between people who depend on government benefits and those who do not is one of kind, not of degree.
But how should we classify consumers covered through the ObamaCare exchanges? Are they government dependents or not? The issue is tricky.
Although almost nine of 10 people enrolled in the exchanges pay premiums discounted by the tax credits the federal government gives health insurers, they are not fully dependent on government welfare. On average, they pay 28 percent of their premiums with their own money. Whether or not they are net recipients of welfare is not clear, because their net tax liabilities are not determined until the Internal Revenue Service processes their 1040s.
For those who are net taxpayers, we cannot say whether they are paying more or less taxes than they would pay without ObamaCare -- not unless we know whether the healthcare law caused them to lose (tax-exempt) employer-based benefits.
Before Congress passed the Affordable Care Act in 2010, many experts anticipated that it would lead to a hemorrhaging of employer-based benefits, as businesses and their employees figured out that going into ObamaCare’s exchanges would reduce their net tax burden. Unfortunately, the data so far are inconsistent and even contradictory.
- In March, the RAND Corporation published survey results that show the number of adults under 65 years old with employer-based health coverage rose by 8 million since the ObamaCare exchange rollout. This figure swamps the 6.5 million uninsured who became dependent on Medicaid and the 4.1 million uninsured who obtained coverage through an exchange. It’s also more than the 7.1 million enrolled in exchanges who were previously insured. This is why the RAND report can be called “optimistic” on employer-based benefits.
- One report that contradicts the RAND report comes from Goldman Sachs. According to Scott Gottlieb of the American Enterprise Institute, the investment banking giant estimates that small employers dropped 2.2 million beneficiaries from coverage, a reduction of 13 percent from 2013. So much for optimism.
- Another pessimistic report was published last year by Heritage Foundation researchers Ed Haislmaier and Drew Gonshorowski. They reviewed actual filings by health insurers and concluded that nearly 3.8 million people lost employer-based coverage through June 2014.
- In March, the Centers for Disease Control & Prevention reported early estimates from the National Health Interview Survey. It concluded that the number of people aged 18 through 64 years with coverage increased by 7 million from 2013 to September 2014. However, only about 1.7 million of them became dependent on Medicaid or other public coverage. Over 5 million received private coverage, including Obamacare exchange coverage. These numbers sound neither “optimistic” nor “pessimistic.”
- Also from 2013 to September 2014, the Gallup-Healthways survey shows a decrease of 1.7 million with employer-based benefits, and an increase of 5.9 million with individual policies (including those bought on Obamacare exchanges). This implies a net increase of 4.2 million with private coverage. However, the survey also shows an increase in public dependency of 5.3 million people! This report, which points toward pessimism, is the one most widely reported in the media because it was turned around quickly.
So what may we conclude about ObamaCare’s results to date? For reasons yet unknown, the most certain outcome that the president’s healthcare reform has caused immense confusion about the numbers of uninsured. That in itself is reason for Congress to revisit this controversial and unpopular law.
John R. Graham is a senior fellow at Independent Institute and a senior fellow at the National Center for Policy Analysis.