Employer Sponsored Health Plan Enrollment Will Hit 159M in 2033

Employer-sponsored health plan enrollment among nonelderly Americans will grow after 2025, accompanied by higher private payer premiums, a Health Affairs study found.

The study used Congressional Budget Office projections to estimate future coverage trends. However, the researchers noted many uncertainties embedded in these trends, including future economic, policy, and healthcare utilization changes.

The researchers focused on coverage in employer-sponsored health plans, Medicaid and Children’s Health Insurance Program (CHIP), and nongroup plans, as well as the uninsured.

Employer-sponsored enrollment dipped in 2023 from 2022 levels, but the study found that it will remain stable through 2025 at 155 million covered persons.

“That decline is explained both by lower employment projected in the CBO’s macroeconomic forecast, causing a decrease in employers’ offers of insurance, and by employees’ enrollment in nongroup coverage in response to the availability of the enhanced Marketplace subsidies through 2025,” the study explained.

After 2025, enhanced subsidies will end and employment will increase, driving more people to employer-sponsored coverage. Approximately 157 million individuals may have employer-sponsored coverage in 2027. By 2033 this population will grow to 159 million.

Private payer premiums will also trend upward from 2023 through 2033. In 2023, the private payer premium growth rate will be 6.5 percent. Premiums will grow 5.9 percent from 2024 to 2025 and 5.7 percent from 2026 to 2027. By 2033, the average premium increase will be 4.6 percent.

Nongroup coverage among nonelderly Americans will be buoyed by the American Rescue Plan Act’s (ARPA) enhanced subsidies until these subsidies expire in 2026. As a result, 2025 will bring the highest levels of nongroup coverage enrollment. With an estimated 22 million enrollees in 2025, the nongroup coverage population is expected to grow by 5 million enrollees in five years.

However, the end of enhanced subsidies will kickstart a rapid decline. Enrollment is expected to stabilize at 18 million enrollees between 2027 and 2033.

Medicaid and CHIP enrollment experienced a slight decrease from 2022 to 2023, and that trend will continue through 2025. The end of redeterminations will stabilize enrollment numbers for this population. From 2025 through 2033, Medicaid and CHIP enrollment combined will hover around 71 million enrollees.

CHIP enrollment will continue to drop in 2032 and 2033. Researchers expected that healthcare spending in this program would exceed its current budget, leading to disenrollments.

Uninsurance will increase from its historic low in 2023 of 23 million (8.3 percent) to 28 million (10.1 percent) from 2027 through 2033. The end of coronavirus era policies in Medicaid and the Affordable Care Act marketplace will drive this upward trend but will not cause uninsurance to exceed 2019 levels (12 percent).

Separate studies from federal agencies corroborate some of these results. In 2022, HHS predicted that the expiration of the ARPA’s enhanced subsidies will lead to higher uninsurance and healthcare spending.

Additionally, the American Academy of Actuaries anticipated that the end of the enhanced subsidies and the return of Medicaid redeterminations could increase premiums in individual and small group health insurance plans.