Must-read: Richard Mayhew: “ESI, Stability and Cost”

Must-Read: Richard Mayhew: ESI, Stability and Cost: “Kevin Drum is highlighting a point I’ve made before…

…One of the big reasons for the slow growth in Exchange enrollment is that employer sponsored insurance (ESI) has not collapsed. The Congressional Budget Office had projected for years that millions of people would lose their ESI and go on Exchange.  That did not happen: “After four years of private coverage hovering around 61 percent of the population, it jumped up to 66 percent within the space of a single year.” Was this due to the economic recovery? Probably a bit of it. But the economy has been puttering along at about the same pace ever since 2012. The only thing that changed in the fourth quarter of 2013 was the introduction of Obamacare….”

It is not always preferable to have someone on ESI rather than on an Exchange policy or Medicare or Medicaid or CHIP…. ESI is seen as part of the background status quo, so when Mid-Size Motors switches coverage from Aetna to Cigna to save $2.32 per covered life per month, that is just HR doing their thing. It is less disruptive but it is not uniformly better.  If it was uniformly better, the ACA would have just been massive subsidies to employers to provider coverage with a hard employer mandate (see 1993 Clintoncare) and some type of safety net for people out of the work force.  We did not go down that route…. ESI… is good insurance for people who are the least likely to need it…. ESI is not an unmitigated success story on any metric is that ESI is expensive…. It is a good in that higher ESI is less disruptive of a change than an ESI dump but it comes at the cost of giving people expensive and potentially not too usable coverage.