NCPA - National Center for Policy Analysis

Obamacare's Effect on Obamacare's Health Costs

December 28, 2016

Senior Fellow John R. Graham writes at NCPA's Health blog:

The Bureau of Labor Statistics has published a chart showing how health benefit costs among private employers have increased over the past decade. The chart shows health benefits increased from 6.9 percent of total compensation in September 2006 to 7.6 percent last September. The 0.7 percentage point absolute increase is a relative increase of ten percent.

The chart shades the period of the Great Recession, (December 2007 through June 2009), after which health benefits as a share of total compensation really jumps. This is counter-intuitive, because health benefits are stickier than wages, so would normally have shrunk as a share of total compensation as wages caught up.

President Obama signed the Affordable Care Act in March 2010. It is hard to determine the ACA\'s effect at any single point after that, because its regulations dripped out over the years. The exchanges, which heavily subsidized individual health insurance, began providing coverage in January 2014. The establishment of exchanges would have encouraged employers to "dump" their employees into them.

The law inhibited this through a mandate on employers of 50 or more workers to offer "affordable" health coverage. However, the Administration delayed enforcement of this mandate until 2015 for employers with 100 or more workers and until 2016 for those employing 50 to 99 workers. Employers of fewer than 50 workers do not bear the mandate.

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