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Obamacare has not killed health insurance at work, survey finds

Stephen Lam/Getty Images
  1. Employers did not drop health insurance during the first year of Obamacare, a new survey shows.
  2. The new survey data could allay fears that companies will dump workers onto the new insurance exchanges to dodge paying premiums

Employer coverage stays steady in 2014

One persistent Obamacare fear, for years now, has been that the new law would decimate the employer-sponsored insurance system. Why would companies waste money on buying coverage for their workers, the argument goes, when they could hand these people off to Obamacare's new exchanges?

And some high profile companies like Walmart went through and did this, leading to much speculation about whether Obamacare would kill employer-sponsored coverage.

New research from the Urban Institute suggests that, at least in year one, companies like Walmart were the exception rather than the norm: employer-sponsored coverage held steady through the Affordable Care Act's launch.

coverage

Before Obamacare launched in June 2013, 71.2 percent of workers had employer-sponsored health plans. That number ticked upwards just slightly to 71.2 percent as of September 2014, a change that the researchers say is not statistically significant.

Numbers held constant at both large and small firms, as the chart above shows. Large companies were more likely to offer health benefits before the Affordable Care Act kicked in — and are still doing so at a greater rate after it came into effect

A handful of big companies have reduced coverage

This isn't to say there are no examples of employer dropping. Alongside Walmart, other companies like Target, Trader Joe's, and UPS all scaled back benefits while pointing a finger at the new health law.

Some workers, particularly those earning low wages, might get a better deal — the insurance subsidies the government will offer may be higher than what an employer like Walmart was willing to offer. There are definitely also higher-earning workers there who will get smaller government subsidies. Their premiums might go up.

What the new Urban Institute numbers suggest is this type of dropping isn't widespread. And the fact that coverage rates held steady suggests that, for every company dropping insurance there are others adding the benefit — maybe to help their workers comply with the individual mandate.

Why do companies keep offering coverage?

Employers could stand to save money not offering health insurance coverage. But they also see a lot of benefit in offering the benefit — enough that most of them kept doing so, even as Obamacare made another option available.

Companies currently offer health benefits to stay competitive. A robust health plan can woo potential employees, deciding between two different firms. It's also an investment in building a healthier work force that takes fewer sick days.

Then, there's also a huge financial benefit: Employers get to pay for health insurance with pre-tax dollars. That makes a dollar of health-care benefits go further than a dollar of wages.

This probably helps explain why, in Massachusetts, the number of businesses offering coverage under its 2006 universal coverage law hasn't gone down – it's actually gone up.

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