The Affordable Care Act and its effect on employers: Trend analysis
The Patient Protection and Affordable Care Act of 2010 (ACA) contains several provisions that directly affect employers and impact the employer-sponsored health insurance (ESI) system through which the majority of Americans receive coverage. While some experts predicted declines of 4.5 percent or more in employer-sponsored coverage from 2010 to 2016, ESI remained stable in Michigan in 2014, with the continuation of many notable trends.
This brief updates one published earlier in 2015 by summarizing trends in employer coverage in 2014, when many ACA provisions took effect. This brief also summarizes recent legislative and regulatory changes to provisions of the ACA relevant to employers, as well as an update on certain key provisions that have faced implementation challenges.
- Similar to prior years, more than three out of four business establishments in Michigan had fewer than 50 workers in their firm in 2014. However, the share of these firms that offered health insurance to their workers declined from 40 percent in 2013 to 33 percent in 2014. In contrast, over 90 percent of larger firms offered coverage.
- From 2009 to 2014, average premiums grew faster for larger employers than for small employers, while overall premium growth remained below the national average. On the other hand, average deductibles grew faster from 2013 to 2014 than the national average. However, average deductible levels remain below the national average.
- The enrollment rate of eligible workers in their employer’s health plan increased both in Michigan and nationwide in 2014. However, the rate of self-insurance among small groups in Michigan decreased in 2014.
- Multiple ACA provisions for employers were substantially changed in 2015, as Congress passed separate legislation pausing three ACA taxes, repealing the automatic enrollment requirement, and making the small group definition a state option for 2016. The employer mandate was implemented for firms with 100 or more full-time equivalent (FTE) workers in 2015, and will be fully implemented for firms with 50 or more FTE workers in 2016.