Employer mandates: essential to reform?

Two states currently have employer mandates to provide health care for workers. New data from San Francisco updates the effectiveness of this strategy to insure America. 

In January 2008, the city of San Francisco implemented the Health Care Security Ordinance. Meant as the city’s first attempt towards creating universal health coverage, the ordinance included a “pay or play” employer mandate for businesses that employ twenty or more workers. Businesses either had to contribute a pre-determined amount to employees’ private health insurance or contribute to the city’s low cost “public option” plan, Healthy San Francisco. Administered by the city’s Department of Public Health, the plan covers a multitude of services including primary care, emergency care, and pharmaceuticals.

A recent Health Affairs study evaluated health care trends for 2 years (2008-2009) in the city of San Francisco and also among firms in surrounding counties not subject to the ordinance. The authors investigated employers’ compliance with “pay or play”, the effect of the mandate to employees’ benefits, and employee health premiums. The Affordable Care Act (ACA) will implement a similar employer mandate nationwide in 2014. Thus, this study offers insight into the future impact of the ACA.

Using a telephone survey (Bay Area Employer Health Benefits Survey), the authors interviewed representatives who made decisions on their firm’s employee benefits. Besides collecting data on benefit offerings, the authors asked questions on changes to health benefits, plan types and premiums, and demographic and socio-economic characteristics of firm employees. Health benefit patterns, employee eligibility, and employees receiving benefits were analyzed before and after implementation of the ordinance. Overall, close to 350 firms in San Francisco and 290 firms from surrounding counties were included.

Although the proportion of employers offering health insurance was high (93%) prior to implementation of the ordinance, the authors did find that the ordinance helped to improve the proportion to 96% (p=0.079). Among firms from outside counties, the opposite trend was observed (the rate fell from 94% to 90%). Premiums did increase by 16% over the 2-year period. However, the burden for these premiums fell more often on the shoulders of employers rather than employees. Besides covering more employees, data showed that these firms not only expanded health benefits but also contributed more to the Healthy San Francisco “public option” plan.

Commentary

Currently, Massachusetts and Hawaii are the only states that have an employer mandate, and studies show that the proportion of employers offering coverage in these states is increasing. San Francisco’s design has similarities to the national employer mandate and provides the strongest and most up-to-date evidence on the potential impact of the Affordable Care Act (ACA). Despite rollout of the ACA in one year’s time, emphasis on city and state level studies should be encouraged, as their results will continue to drive the health reform debate and provide evidence for future modifications for the ACA.

Colla, CH, et al. “San Francisco’s ‘Pay Or Play’ Employer Mandate Expanded Private Coverage By Local Firms And A Public Care Program.” Health Affairs. 2013; 32 (1): 69-77.

by

Nii Darko, DO, MBA