The Medicaid Expansion Lowered Use of Employment-Based Insurance

By April 28, 2017Commentary

If you had the choice between a health insurance plan that likely has a high deductible and other cost-sharing, and for which you probably pay a significant part of the premium, or a taxpayer-funded gold-plated plan for which you pay little or nothing in premium or cost-sharing, which do you think you would choose?  With the Medicaid expansion under the federal health reform law, that has become a very real choice for tens of millions of Americans.  And if you are an employer which option would you want your workers to choose?  A brief from the Agency for Healthcare Research & Quality examines the impact of the Medicaid expansion on use of employer-offered insurance.   (AHRQ brief)    Several factors impact the use of employment-based health insurance.  One is whether the employer offers health insurance.  The majority of workers are at companies that are mandated to offer health insurance.  The second is whether the employee is eligible under the plan.  Many workers, mostly part-time, are not eligible.  And the third is whether an eligible employee chooses to sign-up.  Some employees may have spousal coverage.  Theoretically, with the individual mandate, all eligible employees have to find some source of health insurance.

The brief used data from 2008 to 2011 to identify use of employment-based insurance, comparing states that did a Medicaid expansion with those that did not.  Overall the enrollment rate in company plans declined from 53.9% in 2008 to 47.8% in 2015.  All three factors contributed to this decline.  In 2008, well before the Medicaid expansion was implemented, states that ultimately expanded Medicaid had a 2.7% higher enrollment rate in employer-sponsored insurance than did ultimate non-expansion states.  Those states that expanded had a faster enrollment rate decline by 2015, 7.1% compared to 4.5%.  The declines occurred in high wage companies and large companies as well as their counterparts.  The rates of offering health insurance did not change differentially from 2008 to 2015 in expansion and non-expansion states.  There was a non-significant comparative decline of eligibility in expansion versus non-expansion states, which may partly account for the difference in enrollment. The great bulk of the difference was due to differences in take-up of available health insurance among eligible workers.  So two things appeared to have happened, one with more certainty.  It may be that some employers in expansion states tightened eligibility and it is pretty certain that fewer workers in expansion states took insurance for which they are eligible.  So once again, taxpayers get screwed.

Author Kevin Roche

The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry through Roche Consulting, LLC. Mr. Roche is available to assist health care companies through consulting arrangements and may be reached at khroche@healthy-skeptic.com.

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