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Employment-based health coverage remains steady

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Contrary to early predictions, the percentage of employees with health care coverage through their employers has remained near steady since key provisions of the health care reform law took effect, according to an analysis released Wednesday.

The analysis, funded by the Robert Wood Johnson Foundation and the Urban Institute, found that 72.1% of employees in March had employment-based coverage, up from 70.8% in June 2013.

By company size, coverage rates showed little change, with 50% of workers in March at firms with less than 50 employees covered by a health plan, up slightly from 49.4% in June 2013, while 83.6% of employees at firms with 50 or more employees had coverage in March, up from 82.5% in June 2013.

That relative stability of coverage shows that “concerns about employer-sponsored health insurance evaporating after the implementation of health reform have not materialized,” Kathy Hempstead, senior adviser for health care at the Robert Wood Johnson Foundation in Princeton, New Jersey, said in a statement.

That stability of coverage contrasts sharply with widespread predictions that employment-based coverage would fall following the Jan. 1, 2014, effective date of Patient Protection and Affordable Care Act provisions that opened public exchanges and gave rich federal premium subsidies to lower-income individuals to purchase exchange coverage.

“The availability of sliding scale federal subsidies for individuals with family incomes between 100% and 400%” of the federal poverty level “could reduce the incentive for firms to offer coverage, particularly for firms with a large-share of low-wage workers eligible for more-generous subsidies,” the analysis noted.

But the combination of the ACA's individual mandate, which imposes financial penalties on employees not opting for coverage and a recruiting advantage for employers offering coverage creates “powerful financial incentives” for the continuation of employer-sponsored insurance plans, the analysis said.