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Small firms, bigger changes: Health insurance coverage take-up rates in small firms after the ACA (Kattih, Mansour, & Mixon, 2019)

Review Guidelines

Absence of conflict of interest.

Citation

Kattih, N., Mansour, F., & Mixon, F. G. (2019). Small firms, bigger changes: Health insurance coverage take-up rates in small firms after the ACA. Applied Economics, 51(54), 5878–5889. doi:10.1080/00036846.2019.1630710

Highlights

  • The study’s objective was to examine the impact of the Affordable Care Act of 2010 (ACA) on employee health insurance take-up rates. 

  • The study was a nonexperimental analysis that used a statistical model to examine the impact of the ACA on employee health insurance take-up rates in small firms in the United States. The study used 2006–2017 data from the Kaiser Family Foundation and Health Research Educational Trust Survey of Employer Health Benefits. The authors compared employee health insurance take-up in small firms with fewer than 50 employees to larger firms as a comparison group. 

  • The study found a statistically significant decrease in employee health insurance coverage take-up for small firms after the implementation of the ACA.  

  • The quality of causal evidence presented in this report is low because the authors did not ensure that the groups being compared were similar before the intervention. This means we are not confident that the estimated effects are attributable to the ACA; other factors are likely to have contributed. 

Intervention Examined

Affordable Care Act (2010)

Features of the Intervention

The Affordable Care Act of 2010 (ACA) included several provisions intended to reduce the number of uninsured Americans. The major provisions of the ACA went into effect in 2014. This study examined the impact of the ACA on small firms with fewer than 50 employees. For these firms, the ACA changed the way premium rates are calculated, which may have reduced the premium rates that employees faced for health insurance. In addition, the ACA established the Small Business Health Options Program and tax credits to help small firms buy affordable health insurance for their employees.  

Features of the Study

The study was a nonexperimental analysis that used a statistical model to examine the impact of the ACA on employee health insurance take-up rates in small firms. The authors compared changes in employee health insurance coverage take-up—the proportion of a firm’s employees who are covered by employer health insurance—among small firms with fewer than 50 employees to changes among a comparison group of larger firms with more than 50 employees from 2006 to 2017, controlling for other firm characteristics. This period covers the passage of the ACA through the implementation of the law. The authors examined impacts of the ACA from 2010 through 2014, the period when firms could have anticipated the law and when all provisions of the law were finally implemented. The authors used larger firms as a comparison group because specific ACA provisions were targeted to small employers and would therefore not likely have affected large employers. The analysis was restricted to firms that did not begin offering health insurance on or after 2014 because the employer mandate provision of the ACA implemented in 2014 required large firms not currently doing so to provide health insurance coverage to their employees. The analysis was also restricted to firms with non-grandfathered health insurance plans (plans that were established after March 23, 2010). The sample included 549 small firms and 2,630 large firms identified across all regions of the United States. The study used data from the Kaiser Family Foundation and Health Research Educational Trust Survey of Employer Health Benefits, which includes private and nonfederal public employers with more than two employees.  

Findings

The study found a negative and statistically significant relationship between the ACA and employee health insurance take-up rates for small firms. After ACA implementation, employee health insurance take-up rates decreased 2.0 to 2.7 percentage points more in small firms than in larger firms.   

Considerations for Interpreting the Findings

The authors’ statistical model assumes that there were similar trends in employee health insurance coverage rates in small and large firms before the ACA. The information provided in the study does not support that conclusion, as coverage rates in small firms were increasing in the years leading up to the ACA (between 2006 and 2009), while an opposite trend was occurring in large firms. These preexisting differences between the groups—and not the ACA—could explain the observed differences in outcomes. 

Causal Evidence Rating

The quality of causal evidence presented in this report is low because the authors did not ensure that the groups being compared were similar before the intervention. This means we are not confident that the estimated effects are attributable to the ACA; other factors are likely to have contributed.  

Reviewed by CLEAR

May 2021