The impact of Medicaid expansion on employer provision of health insurance

Abstract

Using the 2010–2015 Medical Expenditure Panel Survey-Insurance Component, this study investigates the effect of the Affordable Care Act’s Medicaid eligibility expansion on four employer-sponsored insurance (ESI) outcomes: offers of health insurance, eligibility, take-up, and the out-of-pocket premium paid by employees for single coverage. Using a difference-in-differences identification strategy, we cannot reject the hypothesis of a zero effect of the Medicaid eligibility expansion on an establishment’s probability of offering ESI, the percentage of an establishment’s workforce that takes up coverage, or the out-of-pocket premium for single coverage. We find some evidence suggestive of an inverse relationship between the expansion of Medicaid and the percentage of an establishment’s workers eligible for ESI. In line with other employer- and individual-level studies of the effect of the ACA on employment-related outcomes, we find that employer provision of health insurance was largely unaffected by the Medicaid expansions.

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Notes

  1. 1.

    This expansion allowed individuals up to age 26 to enroll in their parents’ health plan, giving young adults a new option for obtaining insurance not related to their own job.

  2. 2.

    Analyses by the authors of the 2010 to 2015 Medical Expenditure Panel Survey—Household Component reveal that approximately 33% of non-elderly working adults in families with incomes of less than 138% FPL have access to ESI and that this percentage rises to 59% for persons in families with incomes less than 400% FPL.

  3. 3.

    Specifically, if firms with at least 50 full-time equivalent workers did not offer coverage and any full-time employee received a premium tax credit for purchasing Exchange-based coverage, the firm would pay an annualized penalty of $2000 for each full-time employee less 30. The ESRR began in 2015 for firms with 100 or more full-time equivalent workers, but was delayed until 2016 for firms with 50 to 99 full-time equivalent workers.

  4. 4.

    While we would also have been interested in examining the ACA’s effect on part-time work, questions referencing part-time work changed on the MEPS-IC instrument between 2013 and 2014. Prior to 2014, no specific definition for part-time workers was provided. In 2014, a change in the survey instrument added an additional question referencing the number of employees working less than 30 h per week. This creates an issue in that employers may have responded differently to the percentage of their workers that were part-time when faced with a clear definition of part-time work. No other employment outcomes (such as outsourcing and other workforce changes) that might be expected to have been affected by the ACA are included on the MEPS-IC.

  5. 5.

    Micro-data are only accessible within a U.S. Census Bureau Center for Economic Studies Research Data Center following project approval. Given the research team’s approved project proposal scope, we are unable to extend our analysis beyond 2015.

  6. 6.

    Given U.S. Census Bureau policies, we were unable to disclose detailed information on the distributions of each of these outcomes. However, using the similar Kaiser Family Foundation/HRET Employer Health Benefits Survey from 2011-2015, we found that approximately 10.79% of firms have 100% take-up rates and 66.83% have at least 90% of eligible workers take-up coverage. Corresponding statistics for eligibility rates exhibit a similar pattern, whereby 21.27% of firms report 100% eligibility and 54.31% report at least 90% of workers eligible.

  7. 7.

    For this baseline measure, early adopters of Medicaid expansion were coded to 0 prior to 2014. As a sensitivity check, we use an alternative Medicaid expansion indicator set to 1 if childless adult eligibility was 100% FPL or greater. Early adoption states are coded to 1 in this model if eligibility was 100% FPL or higher.

  8. 8.

    Establishments refer to actual physical locations of an employer; firms refer to the entirety of an employer’s operations across physical locations. Firm size is split into seven categories by the number of employees: 0–9; 10–24; 25–49; 50–99; 100–249; 250–499; and 500+.

  9. 9.

    The MEPS-IC uses 11 industry categories based on one-digit NAICS codes: professional service providers; religious, civil, and nonprofit organizations; finance insurance, real estate, and company management; manufacturing or mining; wholesale trade; transportation or utilities; construction; agriculture, forestry, fishing, and hunting; retail trade; accommodations, food service, entertainment, or recreational services.

  10. 10.

    Although the employer mandate only applies to full-time employees—that is, employees working at least 30 h per week—the MEPS-IC does not identify the quantity of workers that work full-time versus part-time at the firm level.

  11. 11.

    For presentation purposes, we rescale the linear probability model coefficients to represent percentage points rather than probability points.

  12. 12.

    Examples of research using this transformation include Bellemare et al. (2013), Pence (2006) and Moss and Shonkwiler (1993).

  13. 13.

    We use a triple difference approach rather than stratifying our sample because we are prevented from stratifying our sample due to MEPS-IC Census Bureau disclosure standards.

  14. 14.

    Our failure to reject the hypothesis that Medicaid expansion affected single OOP premiums is not contingent upon our use of the inverse hyperbolic sine transformation; the results are the same regardless of whether or not the transformation is used.

  15. 15.

    Analogous triple difference model estimates using the continuous Medicaid expansion measure in lieu of the binary measure also reveal null findings and are available upon request.

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Acknowledgements

This work has been supported by the Robert Wood Johnson Foundation SHARE Program and award #94-16-01 from the Russell Sage Foundation. Any opinions expressed are those of the author(s) alone and should not be construed as representing the opinions of either Foundation. Any opinions and conclusions expressed herein are those of the author(s) and do not necessarily represent the views of the U.S. Census Bureau. All results have been reviewed to ensure that no confidential information is disclosed. This research also uses data from the Census Bureau’s Longitudinal Employer Household Dynamics Program, which was partially supported by the following National Science Foundation Grants SES-9978093, SES-0339191 and ITR-0427889; National Institute on Aging Grant AG018854; and Grants from the Alfred P. Sloan Foundation.

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Abraham, J.M., Royalty, A.B. & Drake, C. The impact of Medicaid expansion on employer provision of health insurance. Int J Health Econ Manag. 19, 317–340 (2019). https://doi.org/10.1007/s10754-018-9256-x

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Keywords

  • Employer-sponsored health insurance
  • Premiums
  • Affordable Care Act
  • Medicaid

JEL Classification

  • I13
  • I18
  • J33
  • J38