On the other hand, employers have long been subsidizing the rest of the health care system, spending $578.6 billion annually on health care. A recent American Health Policy Institute study showed that employers will be facing marginal ACA-related costs of $4,800 to $5,900 per employee over the next decade. And the new S&P Capital study says that S&P 500 employers as a whole could save $700 billion by 2025 if they begin dropping coverage and pay the employer mandate penalty instead.
Even so, dropping coverage will not be a costless proposition for employers. If employers all pull out, the employer mandate penalty could become a lever that politicians will use to milk employers. It’s hard to imagine that Congress would allow employers to keep all of that $700 billion in projected savings, particularly if the federal deficit explodes from providing exchange subsidies to millions more people.