Fewer people will have employer health insurance, CBO projects

How your health care will change in 2013
How your health care will change in 2013

As "Obamacare" kicks in, a growing number of Americans will move away from employer-provided health insurance plans, according to the latest forecasts from the Congressional Budget Office.

Some 7 million people are expected to lose or drop their employment-based coverage by 2022, according to CBO. That's up from the 4 million the agency estimated in August.

Around 170 million Americans currently have heath insurance tied to their jobs, according to the latest U.S. Census data.

Those who lose that coverage won't all be joining the ranks of the uninsured or the unemployed, though. Many are expected to shift into the health insurance exchanges being set up under the Affordable Care Act. The number of people participating in those exchanges is projected to grow from 7 million in 2014 -- the first year they'll be available -- to 24 million in 2016.

The CBO's forecast revision was prompted by a change to the tax laws under the fiscal cliff deal in January, which made the Bush tax cuts permanent for all but the wealthiest Americans. The CBO had previously crunched the numbers thinking that tax rates would rise for everyone.

Since employer-provided health care insurance is not taxable, the CBO's theory is that the benefits aren't as valuable when tax rates are lower, said James Klein, president of the American Benefits Council, a trade association for large employers. So some workers -- particularly lower-income folks -- may find it more desirable to forgo their employer's coverage and seek insurance in the exchanges, where they may be eligible for a subsidy.

At the same time, employers with large, low-wage workforces may find it financially advantageous to withdraw health coverage, even if they have to pay penalties. The CBO expects penalties to total $130 billion over the next decade, up $13 billion from its previous forecast.

Are you planning to enroll in a state health insurance exchange or hope to be covered under the expansion of Medicaid? If so, please email me at tami.luhby@turner.com. You could be profiled in an upcoming story.

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