I recently stumbled across a Wall Street Journal MarketWatch.com article discussing results from an employer-participant survey regarding the Affordable Care Act. I thought some of the findings were really interesting and completely relevant to all of us as HR Practitioners/Benefits Experts as well as in our more personal roles as Consumers/Employees/Taxpayers/Americans.
A survey conducted by the Philadelphia Federal Reserve suggests that the Affordable Care Act has initially reduced employment and increased prices.
Breaking it down:
15.2% of participants said the number of workers is lower due to the impact of ACA requirements.
– We’ve certainly heard employers asking about this possibility. However, there would seem to be some constraints on this change. After all, an employer has to ensure they have an adequate workforce with the requisite skills. What does make sense is that workers staying employed just to have medical benefits now have an alternative way through the public exchanges like HealthCare.gov. This may open more jobs up for active job seekers who are more career-minded, but that’s just supposition at this point.
16.7% found the proportion of part-time work was up.
– We’ve seen a huge rise in the interest around managing variable hour employees. (Those that might be full or part-time depending upon their scheduling.) Since the ACA only mandates benefits for full-time employees (over 30 hours) many observers have been curious to see if employers would rebuild their workforces by exchanging full-time jobs for part-time. Equifax’s eThority application has great modeling tools around the unintended consequences of these possible actions for any employer looking to do some modeling.
28.8% said prices to customers rose.
– This is the most concerning statistic to me as I’m always hearing about surveys, such as the CareerBuilder survey, showing the majority of Americans are living paycheck to paycheck. This just seems to increase the pressure on an already difficult situation.
1.6% said wage and salary compensation per worker is higher.
Between the ‘pay or play’ mandate which includes additional costs per employee depending on the employer choice and the additional taxes (including potential excise taxes), employers are having to plan more in their budgets to cover the employee overhead costs. As a result of the additional planning and taxes involved…..
3% of participants said they were dropping health insurance.
– This is a much lower percentage of employers than the fear mongers would have had us believe when this legislation was new. I’m glad to see the number is so small, but I know there is a lot of dust that hasn’t yet settled.
51.5% said they were making changes.
2.9% said more employees are being covered, but manufacturers are reporting higher employee contributions, deductibles, out-of-pocket maximums and copays, with a lower range of medical coverage and a lower size and breadth of the network.
I know most of you looking at these numbers are thinking: “those don’t seem significant enough to reach the conclusion that the ACA is reducing employment and increasing prices.” If you check out the full survey results here, you will see that most employers haven’t experienced any changes due to ACA. Yet of the employers who have seen changes, the experience leads one to conclude that reduced employment and increased prices are occurring and will continue to occur.
According to Stephen Stanley, Chief Economist at Pierpont Securities, “This combination confirms that the Affordable Care Act has been a negative supply shock ─ weaker employment and higher prices ─ a combination that the Fed can do little to fix.”
This survey doesn’t cover the entire U.S. and therefore isn’t comprehensive of all employers; however, I thought it was an interesting preview as to what we might see coming as more employers attempt to meet the requirements of ACA. I’m especially curious to see the results of this survey years from now, after employers have implemented programs to adhere to the ACA to make it work for their companies. Will this health care provision continue to negatively shock the supply side as Stephen Stanley believes has already occurred? If that happens…what will we do next?