Study Health care reform won’t decrease employer-sponsored insurance

A recent study funded by the Princeton-based Robert Wood Johnson Foundation disputes the notion that employers will no longer need to provide health insurance benefits for employees under the Affordable Care Act.

A recent study funded by the Princeton-based Robert Wood Johnson Foundation disputes the notion that employers will no longer need to provide health insurance benefits for employees under the Affordable Care Act.

According to the analysis, completed by the Urban Institute, the insurance exchange subsidy provided through the ACA will only benefit employees earning 250 percent or less of the federal poverty level.

“What’s important for employers to understand is what will really be available to their employees once the law goes fully into effect,” said Judy Feder, a fellow at the Urban Institute who worked on the study and a professor of public policy at Georgetown University. “For most of their workers, it really doesn’t change much at all — the expectation (is) that they will get benefits from their employers.”

According to Feder, employers understand that health benefits are part of a package offered to employees to remain competitive with skilled laborers. The report said most employers who opt out of employer-sponsored insurance will need to make up the difference, in compensation with wages, to remain competitive.

“The mistake is to think … they can drop coverage, let the employees benefit from the subsidies, get those subsidies — and not hike their wages but pocket the money,” Feder said. “If they do that, somebody is going to pick up their low-wage workers, because they are underpaying them.”

John Sarno, president of the Employers Association of New Jersey, said the ACA exchange subsidy will not drastically change the amount of small employers offering insurance benefits, even though there is no requirement or incentive in the ACA.

Sarno, who teaches a health care law class about the ACA at Fairleigh Dickinson University to executive MBA students, said the law increases accessibility, but is unlikely to do anything to mitigate premium price increases — which is the most important determining factor to employers deciding to offer insurance benefits.

“About 50 percent of New Jersey small employers offer insurance to their employees,” Sarno said. “The Affordable Care Act increases demand the way New Jersey’s law increases demand, but there’s nothing on the supply side … so prices go up.”

“For small businesses who are competing for information-intensive workers, they will continue to offer insurance, because they’re competing for skilled workers,” Sarno said. The other half, he added, will “continue not to, because there’s no incentive for them to offer health care insurance,” as most of the small businesses that don’t offer insurance employ workers that will benefit from the exchange subsidy.

A study completed by the Rutgers University Center for State Health Policy in August announced similar findings amongst New Jersey employers of all sizes.