Obamacare's Elephant In The Room

The debate over the Affordable Care Act has focused almost exclusively on the roughly 12.7 million health insurance policies obtained through the law’s online exchanges. But what about the elephant in the room: how it’s also affecting employer-sponsored plans — and the 151 million Americans who are covered by them?

I just completed a new study that answers this question. Here’s the short version: Premiums for millions of employer-sponsored health insurance plans will nearly double over the next decade. Unable to afford added costs, many employers will be forced to stop offering health care coverage at all. Employees will then be left with two options: Purchase even more expensive coverage on the law’s exchanges, or pay thousands of dollars in tax penalties.

In other words, the Affordable Care Act’s harms extend far beyond federal and state exchanges.

It’s important to understand how big this problem is. According to my analysis — which relies on the federal Medical Expenditure Panel Survey, among other government data sources — the employer-sponsored health insurance market covers nearly 12 times as many people as are enrolled in the Affordable Care Act’s exchanges, as of the Jan. 31 cutoff for 2016 plans.

Premiums for employer-sponsored plans are shared by employers and employees. Employers generally pay around 80% of the total costs, while employees pay the remaining 20%. Both will see their costs escalate dramatically over the next decade.

Start with the share paid by employees. Of the eight plan types available in 2016, the most common is a midlevel PPO, covering roughly 90 million people today. Over the next 10 years, I estimate individual employee premiums for these plans will increase by 78%, from $900 annually in 2016 to $1,600 by 2025. Family premiums will grow by a slightly lower 71%, and will cost $4,800 per year by 2025 — roughly $2,000 more than today.

Read the rest of the IBD op-ed HERE.

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