Employers and Health Insurance Under
the Affordable Care Act
Arnold J. Rosoff* & Anthony W. Orlando**
The healthcare system of the United States has historically stood apart
from the systems of other major nations in two very important respects.
First, as has been widely noted and often decried, we are the only major
nation that has not committed to Universal Health Care (“UHC”). 1 Second,
and closely related, our system is built on a foundation of voluntary
employment-based health insurance (“EBHI”), meaning most people in the
U.S. who have health insurance obtain it through their employer or the
employer of a member of their household.2 The Patient Protection and
Affordable Care Act (herein “the ACA” or the colloquial “Obamacare”)3
has undertaken to move us toward UHC—i.e., adequate health insurance
coverage for all citizens—and has provisions that could substantially
change the employment-based nature of our health insurance system.
This paper offers an evolutionary view of our employment-based system:
how we came to have the current system, how the ACA changes things, and
how employers and others are likely to respond to the ACA and other
factors at play in our nation’s contemporary economic and social
environment with regard to EBHI. Section I reviews the history of health
insurance in the U.S., emphasizing how our system came to be so heavily
based on voluntary employer action. Section II assesses the consequences
Professor Emeritus of Legal Studies and Health Care Management, The Wharton School,
and Senior Fellow, The Leonard Davis Institute of Health Economics, University of
** Research Fellow, Sol Price School of Public Policy, University of Southern California,
and Lecturer, College of Business and Economics, California State University, Los Angeles.
Acknowledgements: The authors gratefully acknowledge the assistance and input of Charles
N. (“Chip”) Kahn, III, CEO of the Federation of American Health Systems, and Professor
Robert I. Field, Professor of Law and Public Health at Drexel University.
1. Bruce Vladeck, Universal Health Insurance in the United States: Reflections on the
Past, the Present, and the Future, 93 AM. J. PUB. HEALTH 16, 16-19 (2003).
2. As of May 2014, 55 percent of firms offer health benefits to their workers, and 90
percent of workers are in a firm that offers health benefits to at least some of its employees.
THE KAISER FAMILY FOUND., 2014 EMPLOYER HEALTH BENEFITS SURVEY 8, available at
3. Patient Protection and Affordable Care Act, Pub L. No. 111-148, 124 Stat. 141
(2010) (codified as amended in scattered sections of 42 U.S. C).