• Under PPACA, which workers will shift from private to public insurance?

    Our recent working paper raises questions about how much the Cadillac tax provision of PPACA will induce workers to shift from private insurance to public insurance.  The idea is that the Cadillac tax will affect an increasing share of workers with private insurance, making compensation in wages more attractive over time (relative to compensation in health benefits).  The likely result is that employer-sponsored health insurance will become less generous and some of the workers who qualify for public insurance will chose it instead.   We used historical variations in tax rates to estimate how the likelihood of public and private coverage were affected by changes in tax laws.  The results are shown in the chart below.

    These results indicate that workers in the lowest four deciles (labeled D1-D4) are less likely to obtain private coverage when tax subsidies decline while the likelihood that they will obtain coverage from public insurance increases in response to the same tax change (although not as much).  We also see an increase in the probability of public coverage among high-wage workers (especially in the top two deciles, labeled D9 and D10) that reflects improved relative attractiveness of TRICARE, the public insurance program for retired career military personnel.  As discussed in a prior post, we predict that these effects will combine to shift about 3% of workers and their families from private insurance to public insurance as the impact of the Cadillac tax grows from 2018 to 2030.

    • Steve
      Can you broaden discussion a bit re: eligibility for public insurance, when your employer offers QUALIFIED product. You are making the tax case for crossing over–makes sense, but ACA rules elude me at the time caddy tax kicks in, and not sure who can move from one side of ledger to the other.

      Given rules–and this is where i need clarification, can an employee flip from employer based, to govt subsidized plan if employer offers 60% actuarial equivalent and <9.5% OOP?

      Perhaps another way of asking is, can an employee ask the boss for a cash equivalent voucher to hit the road and buy elsewhere?


      • @Brad F – No, I don’t think an employee can do that. But Steve is talking about employees who qualify for Medicaid or other public program like Medicare or TRICARE. I don’t think they will be blocked from enrolling in such programs no matter what the employer offers. Have you seen anything to the contrary?

    • Austin
      So the folks Steve makes reference too:

      1) Earn less than 138% FPL and have an employer who does not offer coverage (one would assume that at income level, they are performing very unskilled labor or P/T work).
      2) Employed folks, Medicare eligible, who turn down ESI in lieu of a better govt product.
      3) Ditto #2 but insert Tricare i/o Mcare

      Again, I dont know the rules for crossing over when one is employed and has qualifed insurance offered, even when Tricare and Medicare are “options”. I put the latter in quotes, because it is clear to me that if you are not employed, you are eligilbe by virtue of your eligibility criteria. Its the employed aspect that is gumming me up ane what is and what is not allowed vis a vie Uncle Sam.

      Medicaid is a different story, again, if one qualifies for Medicaid, their gross pay is so low as to make any employee offer unrealistic, I ponder if they should be in the same discussion? Going a step further, can you think of any jobs in 2011 that pay <138% FPL, yet they get qualited (PPACA qualifed) coverage? I am at a loss.


      • @Brad F – Remember this is workers (including part timers) and their families. We’re using survey data. You can see all the descriptives in the paper. Turns out there are enough folks in families with a worker who would qualify for public coverage under the law to drive the results we present.

    • Brad
      I have a post coming out tomorrow that will shed a little more light on this question. There is some evidence that firms with generous employer-sponsored coverage also employ some very low-income workers. Some of those workers can qualify for Medicaid and will choose it if the employee contributions required for the employer-sponsored coverage are high enough. I’m not aware of any state rules now or under the new law after 2014 that would allow states to refuse Medicaid coverage to these workers just because they are employed.