Keeping what you like: grandfathering and health insurance coverage take-up rates under the ACA

According to various reports, between 1.8 million and 4.7 million health insurance plans were replaced shortly after passage of the Affordable Care Act of 2010 with new ACA-compliant plans. In order to limit this occurrence, provisions in the ACA included “grandfathering,” which allowed many Americans to retain health insurance coverage that was in place on or before the ACA was signed into law. These health insurance plans were in many cases favored by individuals and employees because they had been customized, unlike many of the new non-grandfathered plans. This study explores the effect of grandfathering on health insurance coverage take-up rates by employees, given that there are some key differences between grandfathered and non-grandfathered plans that perhaps make the former relatively more attractive to employees. Using survey data from the Kaiser Family Foundation and the Health Research Educational Trust, difference-in-difference regressions reported here suggest that take-up rates for grandfathered health insurance plans are generally higher than those for non-grandfathered plans. Estimates generally place these take-up rate differences, favoring grandfathered plans, somewhere between 2.9 and 8.2 percentage points, depending on plan type, firm size and firm location. This finding suggests that more flexible plans are needed to increase employer-sponsored health insurance coverage.