HHS Official: Employers May Move Workers Into Exchanges

The Hill’s Jason Millman is reporting that Joel Ario, who oversees the exchanges for the Department of Health and Human Services, is trying to calm fears that employers would seek to dump their workers into the exchanges once they become operational in 2014. Many conservatives and some employer groups are arguing that the government may be underestimating the shift, but Ario is taking the tact of arguing that if the exchanges provide more efficient coverage, so be it:

“They’ll continue to provide it, and we may wind up with an employer-based system for a long time because exchanges may not develop,” Ario said.

However, if the exchanges prove to be a source for better and cheaper coverage, then employers will be incentivized to scrap their health plans.

If it plays out the exchanges work pretty well, then the employer can say ‘This is a great thing. I can now dump my people into the exchange and it would be good for them, good for me,’ ” Ario continued.

This sounds right, but it’s worth noting that some economists are predicting that the actual shift will be quite mild, since “firms would need to compensate the workers from whom they remove a current benefit.” In fact, a survey of 2,800 businesses conducted by Mercer in 2010 found that employers are “not likely” to stop providing health insurance coverage out of a reluctance of losing control over a key employee benefit. Massachusetts — which has a much more robust employer requirement than the ACA — actually experienced an increase in employer coverage after reform.

After the first 10 years, the Congressional Budget Office estimates that “the number of people obtaining coverage through their employer would be about 3 million lower in 2019 under the legislation.” Actuaries at CMS estimated that just 1.4 million would move out of employer coverage.