Design of a National Longitudinal Survey of Small Businesses to 

Assess the Early Impact of Healthcare Reform 

David Kashihara1

Robert Baskin (Retired) 

1Agency for Healthcare Research and Quality, 5600 Fishers Lane, Rockville, Maryland 20857 

Introduction 

The Patient Protection and Affordable Care Act (ACA), effective January 1, 2014, stated that all firms with 50 or 

fewer full-time equivalent (FTE) employees may purchase health insurance for their employees from health 

insurance marketplaces known as the Small Business Health Options Program (SHOP). Employees of small firms 

were also eligible to purchase subsidized insurance for themselves and their families from the individual 

Marketplaces. In addition, all firms with more than 50 FTE employees were required to offer qualified insurance to 

their employees or pay a penalty if any employees enrolled in subsidized Marketplace coverage. The ACA was 

designed in part to help small employers (those with 50 or fewer employees) provide cost-effective health insurance 

to their employees. As an incentive, small employers who offered qualified insurance might qualify for a tax credit. 

The legislation specified that the scope of covered employers and magnitude of penalties would change over time. 

There are two types of health insurance marketplaces, also known as exchanges, offered by States to the employers 

and individuals in those States: State-Based Exchanges (SBE) and Federally Facilitated Exchanges (FFE). StateBased Exchanges allow employers to use an exchange that was developed by that State for health insurance 

eligibility and enrollment. Federally Facilitated Exchanges allow employers to use the Federal website, 

www.HealthCare.gov, for health insurance eligibility and enrollment. Prior to the implementation of the ACA, 

States were given the opportunity to decide if they were going to offer an SBE or an FFE to employers. When the 

ACA was implemented, 18 States chose to develop a State-Based Exchange while 33 States, including the District 

of Columbia, chose to use a Federally Facilitated Exchange. 

The Medical Expenditure Panel Survey – Insurance Component (MEPS-IC) is an annual survey of private 

employers as well as state and local governments. The survey produces national and state‐level estimates of 

employer‐sponsored insurance including offered plans, costs, and number of enrollees. The MEPS‐IC is sponsored 

by the Agency for Healthcare Research and Quality and is fielded by the U.S. Census Bureau. The private-sector 

sample is comprised of about 42,000 business establishments annually. An establishment is a single business entity 

or location. Firms, also known as companies, can comprise one or more establishments. 

To enable research to compare the health insurance characteristics of firms eligible to use exchanges before and after 

the implementation of the ACA, a longitudinal supplement of private-sector establishments was implemented in 

2014. More specifically, the MEPS-IC longitudinal survey sampled 3,000 responding establishments to the 2013 

MEPS-IC and these longitudinal cases were fielded along with the 2014 MEPS-IC. The longitudinal survey will 

produce valuable research data exhibiting the changes these businesses may experience after the implementation of 

the ACA. This paper describes the design of the 2013-14 MEPS-IC longitudinal survey and illustrates important 

research data that cannot be obtained by an annual, cross-sectional survey. 

MEPS-IC Longitudinal Survey 

The 2013-2014 MEPS-IC longitudinal survey was sponsored by the Office of the Assistant Secretary for Planning 

and Evaluation (ASPE). The survey is a two-year study where the frame for Year 2 (2014) is the respondents to the 

__________ 

The views expressed in this paper are those of the authors and no official endorsement by the Department of Health 

and Human Services or the Agency for Healthcare Research and Quality is intended or should be inferred. 
prior year (2013) full MEPS-IC. The two-year length was a product of funding and respondent burden. The MEPSIC can be especially burdensome to small establishments so the number of survey contacts is carefully managed. 

Sampled establishments in the longitudinal survey were given the same survey instruments as those in the regular 

2014 MEPS-IC and use the same data collection activities as the regular MEPS-IC. During data processing, the 

longitudinal cases were treated separately for imputation and weighting. 

Eligible establishments for the longitudinal survey are part of firms with 50 or fewer employees (full and part time). 

Other eligibility criteria included private-sector only (no state or local governments) and the establishment must 

have responded to the prior year (2013) MEPS-IC. The sample size of 3,000 establishments was set based on cost 

and survey processing constraints. 

Stratification 

The longitudinal survey utilized two stratification variables: Firm Size and State Exchange Type. The firm size 

strata were 1-11 employees and 12-50 employees. The stratum boundary between the two firm size strata was set to 

be the same as used in the full 2013 MEPS-IC to minimize variance implications. State exchange type was used as a 

stratification variable because it is an important study variable with respect to the ACA. The longitudinal survey 

frame establishment counts by strata are shown in Table 1 (unweighted) and Table 2 (weighted). 

Table 1 – Unweighted final frame establishment counts: State Exchange Type by Firm Size 

Exchange Type 1 – 11 Employees 12 – 50 Employees 

SBE 4,195 1,793 

FFE 7,193 3,119 

Table 2 – Weighted final frame establishment counts: State Exchange Type by Firm Size 

Exchange Type 1 – 11 Employees 12 – 50 Employees 

SBE 1,717,287 337,655 

FFE 2,652,158 572,545 

Allocation of Establishments 

During the design phase the 2013 MEPS-IC was not yet completed, so 2012 MEPS-IC data were used. Two of the 

most important variables in the MEPS-IC are Offer Insurance and Number of Enrolled Employees. Because of the 

importance of these two variables, the allocation for the MEPS-IC was designed on a combination of these variables 

using historical compositing factors of 0.44 for the Offer Insurance variable and 0.56 for the Number of Enrolled 

Employees variable. The allocation of the longitudinal survey adopted these compositing factors to be as consistent 

with the MEPS-IC design as much as possible. 

An adjusted optimal allocation was used for the design of the survey. Proportional allocation was not selected since 

it does not consider the variability of target variables in different subgroups. Because most states that were 

developing their own exchanges were approaching the task differently, consideration was given towards putting 

more sample in the SBE states instead of in those states that were using an FFE. The adjusted optimal allocation 

starts with optimal allocation but then is adjusted to boost the precision of estimates for a key subgroup such as 

States with state-based exchanges. Variable cost was not an issue during the design phase so optimal allocation was 

equivalent to Neyman allocation. 

Optimal (Neyman) allocation was selected since optimal allocation minimizes the variance of a specific variable. 

Table 3 shows the preliminary allocation figures based on Neyman allocation. The “Overall” column is the 

combination, using the compositing factors described above, of the separate allocations using Offer Insurance as the 

design variable (weighted by .44) and also using Number of Enrolled Employees as the design variable (weighted by 

.56). Table 4 shows the same preliminary allocation figures as Table 3 but aggregated to the type of exchange. 
Table 3 – Allocation of 3,000 sample Establishments using Neyman allocation by strata 

Stratum Offer Insurance Number of Enrolled Overall 

FFE (1 – 11) 1,480 821 1,111 

SBE (1 – 11) 982 856 911

FFE (12 - 50) 346 835 620

SBE (12 – 50) 192 488 358

TOTAL 3,000 3,000 3,000 

Table 4 – Allocation of 3,000 sample Establishments using Neyman allocation by type of exchange 

State Exchange Type Offer Insurance Number of Enrolled Overall 

FFE 1,826 1,656 1,731 

SBE 1,174 1,344 1,269 

TOTAL 3,000 3,000 3,000 

As mentioned earlier, of interest was the possibility of boosting the sample in the SBE states - at the cost of the 

precision in the FFE states. To analyze the implications of implementing such an adjustment, precision plots were 

created to illustrate the effects of increasing sample in the SBE states (Baskin and Kashihara, 2014). The precision 

for these plots was defined as the inverse of the standard error for the selected key survey variable. The plots show 

the precision curves of SBE, FFE and Overall (all states) for a key survey variable and provides a visual of gains or 

losses when increasing the sample for a particular subdomain. Figure 1 shows the precision plot using Offer 

Insurance and Figure 2 shows the precision plot using Number of Enrolled. 

Figure 1 – Precision plot of Offer Insurance vs State Exchange (SBE) sample size 

 State Exchange (SBE) Sample Size 

Final Response Outcomes 

Table 5 shows the final response outcomes for the longitudinal survey. Of the sampled 3,000 establishments, 2,924 

were in-scope to the survey in Year 2 (2014). There was only one establishment that was undeliverable-asaddressed (UAA) and many of the out-of-scope establishments had gone out of business (about 2.5% overall). The 

data were collected via a telephone prescreener followed by a mailed survey form or web response option, then a 

telephone follow-up if necessary. Most of the prescreener-only establishments did not offer insurance and these 

establishments were not sent any further survey forms. The in-scope response rate for 2014 was 75.6%. 

Table 5 – 2014 Final response outcomes for establishments in the longitudinal survey 

Sample 3,000 

UAA / Out-of-Scope 76

Total In Scope 2,924 

Prescreener Response 980

Mail Response 669

Web Response 214

Telephone Follow-up Response 348

Total Responses 2,211 

At this time the data have not yet been released to the public, so table shells of important estimates from these data 

are provided below. Table 6 shows the overall transitions in offering insurance before and after the implementation 

of the ACA. Table 7 shows the changes in insurance offering by the exchange type location. Table 8 shows the 

changes in insurance offering by firm size. 

Table 6 – Transition percentages of insurance offering status of establishments from 2013 to 2014 

YES in 2014 NO in 2014 Total 

YES in 2013 % % 100 % 

NO in 2013 % % 100 % 

Table 7 – Percentages of establishments that transitioned their insurance offering from 2013 to 2014 by exchange 

type location 

Insurance Offering Transition FFE State SBE State 

YES → NO % % 

NO → YES % % 

YES → YES % % 

NO → NO % % 

Total 100 % 100 % 

Table 8 – Percentages of establishments that transitioned their insurance offering from 2013 to 2014 by firm size 

Insurance Offering Transition Firm Size 

1-10 Employees 

Firm Size 

11–50 Employees 

YES → NO % % 

NO → YES % % 

YES → YES % % 

NO → NO % % 

Total 100 % 100 % 
The MEPS-IC longitudinal data are collected by the U.S. Census Bureau and, for confidentiality reasons, can only 

be accessed in the Research Data Center at the Census Bureau Headquarters in Suitland, Maryland. 

Additional MEPS-IC Longitudinal Surveys 

At this time, to measure planned annual changes within the ACA, ASPE has funded two additional MEPS-IC 

longitudinal surveys. The 2014-2015 survey expands the scope from establishments in firms with 1-50 employees 

to 1-100 employees. The sample size was also increased from the initial longitudinal survey from 3,000 

establishments to 5,000 establishments. Currently, field collection of data for this survey is coming to a close and 

data processing is about to begin. The 2015-2016 survey expands the scope to all employer sizes and the sample 

size has been increased to 7,000 establishments. Allocation and sampling are currently underway for the 2015-16

iteration of this longitudinal survey series. 

References 

Baskin, R. and Kashihara, D., IC Longitudinal Allocation, AHRQ internal report, January 2014. Agency for 

Healthcare Research and Quality, Rockville, MD. 

Kashihara D., Construction of Weights for the 2011 Medical Expenditure Panel Survey Insurance Component.

Methodology Report #28. October 2013. Agency for Healthcare Research and Quality, Rockville, MD. 

http://www.meps.ahrq.gov/mepsweb/data_files/publications/mr28/mr28.pdf 

Kashihara D., Sampling Specification for the 2013-2014 MEPS-IC Longitudinal Supplement. Internal report, 

December, 2013. Agency for Healthcare Research and Quality, Rockville, MD.