Report: Obamacare will cost large employers over $5k per employee

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Large employers are looking at up to $186 billion in Obamacare costs over the next decade, according to a report released Wednesday.

The American Health Policy Institute, an industry-run group, estimates direct and indirect Obamacare costs will cost companies with 10,000 or more employees between $151 billion and $186 billion over the next ten years.

That amounts to$4,800 and $5,900 in additional costs per employee.

The study, authored by former deputy Health and Human Services Secretary Tevi Troy and the institute’s chief economist Mark Wilson, found that businesses will have to adjust their services due to the costs.

“Cost increases in the range of $163 million to $200 million per large employer over the course of a decade will not be overlooked by CEOs, CFOs, or Boards of Directors,” the authors conclude. “Employers have a significant incentive to make fundamental changes to their health offerings as a result of the ACA.”

Large U.S. employers provide Americans with more than 52 million jobs, Troy and Wilson report, and already spend over $578 billion per year providing health care.  

While the cost of health care coverage is rising, partly due to the increased services that Obamacare mandates all health plans must provide, large employers will also be hit with a disproportionate share of the taxes meant to fund the health care law.

Several taxes meant to hit health care industries will likely be passed onto employers, including the medical device tax and insurer taxes on all insurance plans sold.

On top of that, businesses will have to cover excise taxes on high-cost, “Cadillac” plans; the Obamacare temporary reinsurance fee to cover any insurer bailouts; the paperwork-heavy headache of remaining compliant with the complicated law and its endless exceptions and delays; and newly mandated benefits, such as preventive care services and insuring adults up to the age of 26 on their parents’ health plans.

While big businesses are confronted with climbing health care costs, one option is passing them along to their employees, a trend that’s already growing. Shipping giant UPS stopped providing health insurance to employees’ working spouses in August as a result of the health care law costs. Others are contemplating hiking out-of-pocket payments in response.

A February Mercer survey found that 80 percent of companies have either already upped their employees’ deductibles or co-pays to cut down on their businesses’ Obamacare costs, or are considering doing so. (RELATED: 4 of 5 companies may hike deductibles due to Obamacare)

In the end, each large company will need to budget an extra $163 million to $200 million for the health care law’s increased costs. And it’s getting harder than ever to control that spending: a February survey of chief Human Resources officers at large companies found that 62 percent believe Obamacare will make it more difficult to control health care costs at all.

The Obama administration delayed the employer mandate for medium-sized employers in February.

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Tags : obamacare
Sarah Hurtubise