5 Takeaways from the American Action Forum on Employer-Sponsored Insurance

While noting declines in the percentage of people covered by their employers, the AAF panel asked multiple questions about the model's future and opportunities for reform.

On October 13, the American Action Forum (AAF) hosted "The Future of Employer-Sponsored Health Insurance [ESI]" panel. The panel was moderated by AAF president Douglas Holtz-Eakin and included Nina Owcharenko Schaefer, director of the Center for Health and Welfare Policy at The Heritage Foundation, and Casey Mulligan, a professor in economics at The University of Chicago.

1. The value proposition of ESI
    

Holtz-Eakin framed the ESI discussion politically—between the "government-sponsored single-payer healthcare" that the Left prefers and, by the Right, as an "accident of history…[that is] not taken seriously as market phenomenon" that would be typically defended.

Following these contrasts, Mulligan framed ESI's value proposition:

• People stick to the model, even when the price increases.
   
• As distinct from individual health insurance…you're not alone. You're buying with groups of people.
   
• The group insurance structure offers concentrates innovation and ease.
   
• There is a lack of competition, with employers able to get better deals than individual buyers.
   
• Lack of insurance leads to more government-subsidized healthcare.

2. Impact of subsidies
    

Schaefer highlighted how the ACA changed the ESI policy landscape while focusing on efforts to fix the model's deficiencies. The Heritage Foundation executive highlighted the unique challenges of small businesses and how less advantaged subsets of employers impact the role of the ACA marketplace.

Schaefer discussed the subsidy firewalls put in place "to prevent erosion of employer-based coverage," noting that the loosening of these firewalls "have created a deterrent where people are going to say, 'We're just going to flood out of the employer market.'"

Moderator Holtz-Eakin posed how expanded and increased subsidies—in 2021 and then extended through 2025 via the Inflation Reduction Act—"reorganized the deck chairs, moving a lot of people out of ESI and into the ACA."

Despite clear marketplace growth, Mulligan described "Obamacare" as "an incredibly bad brand," with Schaefer reiterating ESI's value proposition as "the brand you know" and a more desirable opportunity with employer resources for benefits navigation versus 1-800-number support from the federal government.

"As people are faced with more and more of these tradeoffs, even with the 'financial benefit,' they'll still want to gravitate" toward ESI.

3. ESI flexibility
    

Schaefer highlighted another ESI value: how quickly employers shifted their health benefits in response to the pandemic, such as telehealth, and how much faster this occurred than in areas such as Medicare. The Heritage Foundation Director noted the ability to pivot faster in general as an advantage of ESI.

Mulligan added to this, stressing the importance of innovation to the U.S. economy and healthcare in particular. The economist noted that companies are better at innovation in general than not only the government, but individuals and their capacity to get the same results. "A group like employers are perfect for that," he concluded. "In an innovative world, the employer system has a lot going for it."

4. Biggest threats to ESI
    

When asked by Holtz-Eakin what ESI's biggest threats were, Shaefer noted "the incremental attempts to supplant it"—citing continued subsidies, State caps, and other "strategic and small" regulatory moves. She added that left-leaning politicians are more likely to succeed with this approach than the universal healthcare and "Medicare for All" messages attempted.

Mulligan believes, however, that Medicare for All still has more legs. With this, Mulligan highlighted a kind of conflicting groupthink in which it's difficult for individuals to achieve innovation individually or navigate massive changes, yet when they do, they find a collective approach "seductive."

AAF's president agreed with Mulligan, stating: "If you say insurance companies are pushing back on it [Medicare for All], that's proof it's a good idea."

5. Policy levers to strengthen ESI
    

For people who fall between the cracks of government-subsidized care and ESI, Schaefer suggested different approaches to grouping individuals. "While it's still a work model and its focused on where you are employed, where we see a mobile workforce and a changing workforce of people patched together … are there ways we can mimic ESI?"

Schafer also suggested further scaling the benefit flexibility employers have come to expect as a result of the pandemic. Mulligan predicted that the intersection of technology and drugs will aid ESI.

The panelists' concluding comments focused on how employers could be innovative leaders in the area of gene-based healthcare services.