New Report: Will Employers Stop Offering Health Insurance? 

Expanded ACA subsidies leave most workers better off if they do

NEW YORK, NY – As Congress considers whether to extend the Affordable Care Act's (ACA) expanded health insurance subsidies beyond 2025, policymakers have largely assumed that such an extension would not undermine employer-sponsored health insurance, which currently covers 161 million out of 183 million privately insured Americans. A new Manhattan Institute report published today challenges that assumption.   

In Will Employers Stop Offering Health Insurance?, Manhattan Institute senior fellow Chris Pope examines the implications of expanded ACA subsidies and finds that they could leave most American workers worse off if their employers continue to provide health insurance benefits to staff. 

Under the original ACA, the average value of exchange subsidies was deliberately set to be worth 5 percent less than the value of the employer-sponsored insurance (ESI) tax exemption, so that it would not deter businesses from offering health insurance to workers and their dependents. Yet the expanded ACA subsidies enacted during the pandemic, whose permanence is being debated currently in Congress, are worth 65 percent more than the value of the ESI tax exemption. Because workers and their families are ineligible for ACA subsidies if their employer offers them health insurance, the permanent expansion of enhanced ACA subsidies would provide an incentive for businesses to stop doing so.

If employers responded to this new set of policy incentives by eliminating ESI to make workers, their spouses, and children eligible for ACA subsidies, it could increase the cost to the federal government by up to $250 billion per year. 

These concerns should be top of mind for policymakers currently debating whether to make expanded ACA subsidies permanent. 

Click here to read the full report.