KHI News Service

New report: ACA will benefit most employers

By KHI NEWS SERVICE | October 08, 2012


Implications of the Affordable Care Act for American Business

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A study released today by a nonpartisan think tank counters critics of the health reform law who say it will increase costs to businesses and undercut their ability to provide employee health coverage.

Instead, the Urban Institute report says, “objective analysis of the ACA’s (Affordable Care Act’s) impact on coverage and costs demonstrates the opposite.”

The report, written by four Urban Institute researchers, was based on a simulation of the impact the law would have had on businesses in 2012, had it been fully in effect. The report's authors concluded that owners of small businesses — those with 50 or fewer employees — that chose to offer coverage would have seen their “average costs per person insured reduced by 7.3 percent.”

The law does not require small businesses to offer coverage but provides tax incentives to encourage them to do so.

According to the report, the ACA won’t generally affect the per-person costs of coverage for large businesses — those with more than 1,000 employees. But overall costs for businesses that size probably will increase because more employees are expected to sign up for coverage.

“Only mid-size businesses (101 to 1,000 employees) as a group, experience an increase in costs per-person insured,” the report stated.

Two factors — expanded enrollment and penalties levied on an anticipated 5 percent of mid-size companies that are still not expected to offer coverage — could lead to an increase in overall spending of 9.5 percent for this group of employers, according to the report.

The report concluded:

“Overall, the evidence simply does not support critics’ arguments that the ACA will burden employers and undermine employer-sponsored health insurance. On the contrary, except for a cost increase to mid-size employers due largely to enrollment increases, the ACA benefits rather than burdens small employers who want to provide health insurance, leaves the overall costs of employer-sponsored health insurance largely unchanged, and offers the potential, through cost containment, of slowing the growth in health care costs, benefiting private along with public purchasers of health insurance.”

The ACA remains a point of contention in the presidential election. Republican nominee Mitt Romney has promised that he will attempt to repeal most of the law if elected.

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