Perhaps a recently published study in Health Affairs will quell the relatively strident prognosticators who predicted that the Affordable Care Act will undermine, that is, kill, employer based health insurance as we know it.  (See F. Blavin, A. Shartzer, S. Long and J. Holohan, An Early Look At Changes In Employer-Sponsored Insurance Under the Affordable Care Act, Health Affairs, January 2015.)  An article in Forbes magazine from September 2013, titled “Obamacare Is Killing Traditional Employer-Sponsored Health Insurance” is but one of many examples of dire predictions about the demise of employer sponsored health insurance.

So far, those predictions appear to be wrong.  But it's complicated.

The decline of employer based health insurance was well underway prior to enactment of the Affordable Care Act.  National rates of employee based health insurance have been declining “nearly every year since 2000.”  Blavin, et al., at 171.  Between 2000 and 2010, the portion of employees having employer sponsored health insurance at small companies (less than 10 employees) declined from 43% to 33%.  At large companies (more than 1,000 employees), the proportion of covered employees declined from 87% to 82% for the same period.  Id., at 171-172.

The Affordable Care Act created a range of competing incentives for employers and employees that affect an employer's decision to continue providing coverage for its employees. The establishment of health insurance exchanges and the availability of payment subsidies for consumers incent employers to drop coverage, particularly those having a large population of low-wage earners who could qualify for the subsidies.  Medicaid expansion, which can provide coverage for low wage earners, also creates an incentive for employers to drop coverage.

On the other hand, the Affordable Care Act continues the preferential tax treatment of employer sponsored health insurance, whereby payments made on behalf of employees for their health insurance are not taxed as employee income.  Thus, the tax treatment of these payments provides an incentive for employers to offer health insurance.  Additionally, the Act imposes penalties on employers with more than 50 employees if the employer does not offer adequate and affordable coverage for these employees.

The Act also encourages small employers to provide health insurance coverage.  It provides for employer tax credits for employers with 25 or fewer FTEs, and employers with 50 or fewer employers can benefit from the introduction of the Small Business Health Options Program (SHOP).  Blavin et al. also suggest that the Act's individual mandate creates a demand on behalf of employees for employer sponsored insurance.

In light of the mix of incentives and disincentives, what's an employer to do?

Apparently, they haven't done too much.  The Health Affairs study, based upon survey data for the period June 2013 through September 2014, found essentially no change in the rate at which employers offer health insurance to their employees between June 2013 and September 2014.  Id., at 174. Similarly, the authors found no change in the rate at which employees accept their employers' offers for health insurance for the same period.  Id.

Indeed, simulation models that preceded this study are somewhat consistent with these results.  The Congressional Budget Office predicted that the Affordable Care Act would result in a decline (6 million fewer people) in employee sponsored health insurance, but RAND predicted that the Act would result in an increase (8 million more people).  Other simulations resulted in estimates between the CBO and RAND estimates.  Id., at 172.  Perhaps a fair take-away from these simulations is to conclude that the Act may lead to neither a decrease nor increase in employer based health insurance.  And the Massachusetts experience should also be noted, which shares key incentives with the Affordable Care Act and resulted in an increase in employee sponsored health insurance (from 73% of employers offering health insurance in 2007 to 79% in 2008). Id.

There can be no doubt that the long term effects of the Affordable Care Act are difficult to predict.  However, evidence to-date suggests that the mix of incentives for individuals and employers may have, if anything, stemmed the 15 year erosion of employer sponsored health insurance.

Much has been written about how employers should respond to the Affordable Care Act and indeed, advice of competent counsel is clearly warranted in light of the complexity of the law and the need to analyze one's individual circumstances and objectives.  But it simply cannot be said that Obamacare has killed employer based health insurance.  On the contrary, the evidence suggests that the range of incentives currently in place for employees and employers may have secured its survival.