Economists have identified strong incentives for employers to drop health insurance coverage for below-average wage employees under the Affordable Care Act. Yet MIT economist Jon Gruber notes that has not happened under the Massachusetts health reform. He and others argue that Massachusetts shows that concerns about employers dropping coverage are vastly over blown.
Pioneer Institute health policy analyst, Josh Archambault, answers Gruber at the Apothecary:
First, the two laws aren’t the same when it comes to allowing access to a public exchange and associated tax credits/subsidies. Under Obamacare, it is much easier for employers to access an exchange, and for employees to receive federal subsidies, as opposed to Romneycare. Second, even if the two laws were exactly the same, there are major cultural and industry differences between employers in Massachusetts and many other states that should prevent deep parallels from being drawn.
Third, there are significant variations as to how small businesses are treated in the two laws. Fourth, there are significant differences between the affordability and penalties schedules. And finally, the economic incentives in the ACA are strong for many employers to drop coverage.