The Evolving Dynamics of Employer‐Sponsored Health Insurance: Implications for Workers, Employers, and the Affordable Care Act

Policy Points: Increasingly, Americans are relying on coverage through a family member to maintain continuous insurance when their own employer‐sponsored insurance (ESI) ends. Meanwhile, employers have responded by limiting access to and imposing surcharges on dependent coverage elections. Between 2005 and 2013, adults who transitioned off ESI became likely to enroll in a non‐group plan and were twice as likely to become uninsured. Special Enrollment Period enrollment figures under the Affordable Care Act (ACA) suggest these dynamics have not meaningfully changed since 2014. Moving forward, more Americans will rely on alternative sources for affordable health insurance outside the ESI system. New ACA outreach efforts are needed to identify and enroll the large and increasing number of individuals who face the end of ESI benefits throughout the year. Context Employer‐sponsored insurance (ESI) is the predominant form of health insurance coverage in the United States, yet little is known about transitions into and out of ESI or whether turnover has increased over time. Methods We fit multistate dynamic transition models for adults aged 18‐61 using Survey of Income and Program Participation data from 2005‐2007 to 2010‐2013 and preliminary Medical Expenditure Panel Survey from the period 2012‐2014. Findings Over a 2‐year period beginning in 2010, 34.6% of adults with ESI experienced a change, up from 31.7% in 2005‐2007. Transitions occurred most frequently among young adults, Hispanic adults, low‐income adults, those in fair or poor health, and service industry workers. But even the groups with the lowest turnover—older adults, married adults, and those with a college degree—had 2‐year rates of change of up to 30%. The probability that an ESI policyholder regained an employer‐based policy after a job change declined by 15% between 2005 and 2013. Meanwhile, the probability that an ESI policyholder enrolled as a dependent on another family member's plan or became uninsured increased twofold. We found little evidence of changes in these dynamics during the first year (2014) of the Affordable Care Act's (ACA) major coverage reforms. Conclusions Increasingly, Americans are relying on dependent ESI coverage through a family member to maintain continuous insurance when their own employer‐based benefits end. Those who transitioned off ESI were also less likely to enroll in a non‐group plan and were twice as likely to become uninsured. The first year of the ACA did not see material changes in the likelihood that an ESI‐insured adult became uninsured or switched to an alternative public or private plan. New ACA outreach efforts are needed to identify and enroll the large and increasing number of individuals who face the end of ESI benefits throughout the year.