Mercer Survey: Few Employers Favor Disallowing ACA Subsidies

Mercer Survey: Few Employers Favor Disallowing ACA Subsidies

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Mercer Survey: Few Employers Favor Disallowing ACA Subsidies
Calendar06 March 2015

 

As part of a recent survey on health care reform, we asked employers whether they would favor or oppose a number of ACA-related changes currently under discussion, keeping in mind the impact of each change on their organization's health benefit program. The change with the least support? Disallowing federal subsidies for individual coverage in states that don't operate their own exchange. Only 27% favor this, while 31% oppose (42% say they have no opinion). By contrast, 80% were in favor of repealing the excise tax, and 64% were in favor of repealing the employer mandate.

The fate of the subsidies lies with US Supreme Court, which heard oral arguments about their legality this week in King v. Burwell. A decision in favor of the plaintiffs would strike down the subsidies for enrollees in the exchanges run by the federal government in 34 states. If the court overturns the IRS regulations that permit the subsidies, roughly 87% of those who have selected plans in the exchange — or about 7.5 million people — would lose the subsidies.

If the Supreme Court disallows the federal subsidies, the impact will be felt beyond the millions of individuals currently receiving subsidies. Employers would be affected in a number of ways. If there is a sudden spike in the number of uninsured and providers are hit with uncompensated care costs, they are likely to shift those costs to insured patients covered in employer plans, as they have done in the past. And low-paid employees who had received subsidized coverage in the exchanges could move into employer plans to avoid the penalty for not obtaining coverage under the ACA’s individual mandate.

In addition, regulators have been challenged to provide timely guidance on the ACA requirements thus far, and this big of a change would likely take precedence over all else. Employers are still awaiting guidance on many technical issues and need time to plan thoughtful strategies, especially when it comes to the excise tax.

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