As reported in the article above, the arrival of the Affordable Care Act (ACA) has not changed employee attitudes towards their employer-provided health insurance. But what about the employers who are providing that health insurance and paying most of its costs? Do not forget that during the run-up to the launch of the ACA there was much talk to the effect that employers would stop offering coverage as soon as they could and, in the words of a recent New York Times article, “send workers to fend for themselves.”

So far that has not happened. Employers have maintained their position as the primary provider of healthcare benefits. The Congressional Budget Office reports that currently 155 million U.S. workers still receive healthcare insurance from their employers. A five-year study by the Kaiser Family Institute found that employer-provided health insurance had not changed for adults under 65 years of age. That followed a period where insurance coverage had been on the decline since 1999.

Even among smaller employers (i.e., those under 500 employees in the Kaiser study), more and more of whom were dropping insurance between 2010 (68% provided insurance) and 2015 (56% provided insurance), only 7% told the HR consultant Mercer in 2015 that they planned to drop their coverage; in 2013 that number was 20%.

Michael Thompson, CEO of The National Business Coalition on Health, which represents employers, summarized the pre-ACA talk this way: “The demise of employer-based coverage was definitely overstated.”

But offering coverage and paying for it are two different things. Although employers are reportedly remaining committed to providing some form of healthcare coverage as a tool for attracting and retaining the best talent, ASE’s own research confirms that they are continuing to pass substantial amounts of the cost of coverage to their employees, and those amounts are continuing to grow.

ASE’s healthcare surveys published in 2011 and again in 2015 found that employers’ share of premium payment (i.e., “co-insurance”) has stayed constant at an average of 80% for the typical Preferred Provider Organization (PPO) plan.

However, plan deductibles (paid by the employee) have increased. In 2011 the average in-network deductible for Michigan employers came in at $821/year (PPO plan- in-network - employee only). By 2015  that same number more than doubled to $1750/year. Further, Out-of-Pocket maximums in 2011 averaged $1,881; but by 2015 they had increased to $3,100.

The above data shows that while large employers and even many small employers seem firmly committed for the time being to providing healthcare insurance as an employee benefit, they are doing it by passing more and more of the costs on to their employees. What, then, if they continue to pass such costs along in such  increasing amounts? Will there eventually emerge a saturation point beyond which the offerings of the public insurance exchanges will begin to look as—or even more—attractive to the typical employee?

This is speculation, of course. But it suggests that Mr. Thompson may be guilty of overstatement himself.

The Times article also reports that one other reason employers have continued to offer health insurance is that there is less financial advantage to dropping it. Employers are penalized $2,000 per worker if they do not offer health insurance under the ACA. However the cost of offering coverage to a family is now about $12,600/year. On the other hand, that comes with a sizable tax break. That tax break, plus the potential for increased employee turnover or attracting less talented workers if it does not provide health insurance – especially in today’s stronger labor market – is further inducement to employers to continue offering some type of healthcare benefit.

However with the next recession, whenever it hits, there will come a more buyer-friendly job market. That will bring less pressure on the employer to offer insurance in order to attract and retain its best workers.

Despite the assertions otherwise, the employer-provided healthcare landscape will continue to change.  ASE will continue to monitor employer benefits to keep members up to date on the compensation market.

Sources: 2015 Healthcare Insurance Benefits Survey (ASE); 2011 Health Care Insurance Benefits Survey—State of Michigan (ASE); The New York Times 4/4/2016.

Don’t miss ASE’s informative conference on compensation and benefit issues. Save the date: 2016 Compensation and Benefits Conference, June 15, 2016.