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The return of employer-sponsored insurance?

It's actually more difficult than you'd think to figure out how many people have health insurance. Government programs publish data, but there are many private insurers and no central database showing policyholders. And the exact definition of uninsured isn't as obvious as you'd think. For example, how should we count somebody who is insured now, but wasn't for 6 of the previous 12 months? There are a few groups that conduct surveys to determine the insured population; these are the best sources we have.

One of the groups that conducts these surveys is the Centers for Disease Control (CDC). They released their new report, covering their surveys up to September 2016. The top line numbers will get the most press: total uninsured rate of 8.8% (lowest ever), youth uninsured rate of 5.0% (lowest ever). In both cases, the uninsured population is reduced to almost half of the pre-ACA numbers. Yeah, we know this already, Obamacare has massively reduced the uninsured number, if it's weakened or repealed all these people will be uninsured again blah blah blah.

But what actually got me thinking - and we've touched on this already between Volume 2 and Volume 6 - is that the insured population is higher than expected, given the number of people enrolled in government health insurance. I want to again put in the caveat that data on the private market is not so perfect, but the math is making me more confident in a theory that the Employer-Sponsored Insurance (ESI) population is performing better than the CBO expected when the ACA was passed.

Recall that during the period 1999-2009, the population covered by ESI was declining by around 0.5%/year. The 2012 CBO projection expected this population to stabilize around the then-current level. Based on my very rough estimate - and please let me know if you have a better one - the ESI population has probably increased 1-1.5% against this baseline. Given that the labor force participation rate has declined by around 1% during this period, this points to an unexpected strength in the ESI market.

I asked myself why this is happening - and didn't come up with any great answers. But I do have a few theories:

  • Employer Mandate: The ACA created penalties for most employers if they don't offer health insurance. Perhaps this "stick" is having its desired effect.

  • Lower Premiums: I don't think that the CBO projected future group-market premiums in their 2012 report. However, the growth of health spending has reduced since ACA passage (possibly but not necessarily due to the ACA). Perhaps this is leading to lower prices for employers, changing the economics slightly.

  • Labor Market Conditions: The labor market has tightened significantly since 2012. Maybe employees (broadly) are more able to negotiate better benefits from employers than expected.

  • Moral Suasion: This one is a bit more subtle, but there may be a change in the overall mindset with respect to the "right" to health insurance. Remembering back 7 years - I think that people didn't have the same feeling that health insurance should be universal. Perhaps I'm not alone, and employers feel a responsibility to support the system.

Most likely it is a bit of each of these factors - and I think they are mutually reinforcing. Maybe there are other reasons? I'll freely admit I'm guessing - if you can think of another idea, definitely let me know.

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