The Affordable Care Act distinguishes

Whichever way it goes, the stakes are high, as analysis published Monday in the journal Health Affairs points out. Tom Buchmueller, a professor of risk management and insurance at the University of Michigan, explains why in four simple bullet points:Well basically it's an efficient way to attract and retain workers because what employers really care about is the total cost of compensation -- not how it's split up between wages, insurance and other benefits. And so if employees recognize that they can purchase it more cheaply when they go through their employer and are willing to accept lower wages to compensate for the health insurance, then the employer is better off and the employees are better off.

The Affordable Care Act distinguishes between large and small employers, where large employers are defined as those with 50 or more full-time equivalent employees. For smaller firms, there's no requirement to offer health insurance but there are some incentives. There's SHOP exchanges, which are a new insurance option for small employers run as part of the state exchanges. Small employers with low-wage workers can qualify for premium tax credits if they purchase through the SHOP exchange. And so both of those factors would lead to tilting the needle in the direction of more small employers offering health insurance.

Indirectly, there's going to be an effect through employee demand. And here, there are effects going both directions. Some workers from small firms will see that they're better off getting a premium tax credit if they go through the exchange. And they're going to prefer that their employer doesn't offer health insurance -- that they offer cash wages instead and then they go off to the exchange and buy coverage.On the other hand, other workers that aren't eligible for large exchange tax credits will decide that they want their employers to offer insurance because of the individual mandate. As the penalty for individual mandate over time becomes more significant, you're going to have more employees taking up coverage offered through work and more employees wanting their firm to offer coverage so that they won't be subject to the penalty.

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