As businesses grapple with the Affordable Care Act (ACA), Duke University and CFO Magazine recently published their latest quarterly ‘Global Business Outlook Survey’ and there are some interesting findings on how the ACA may impact employment levels in the US.
Although it isn’t surprising that US CFO’s voiced concern that the Affordable Care Act could have a negative impact on employment growth, the percentage of respondents indicating that their firms were considering reducing employment due to the impact of ACA was a staggering 48%.
“Nearly half of U.S. companies are reluctant to hire full-time employees because of the ACA. One in five firms indicates they are likely to hire fewer employees, and another one in 10 may lay off current employees in response to the law.”
In addition to reducing or delaying full-time hires, a large proportion of CFO’s indicated that their firms would actively target switching certain jobs from full-time to part-time (below 30 hours) to lessen the financial burden of the Affordable Care Act on their businesses.
“Other firms will shift toward part-time workers. More than 40 percent of CFOs say their companies will consider switching some jobs to less than 30 hours per week or targeting part-time workers for future employment.”
Managing healthcare costs has long been an area of focus for CFO’s and many companies have taken steps to push a greater percentage of the overall cost to their employees. This trend looks set to continue in 2014 with 38% of CFO’s indicating that they may increase the contribution due from employees and retirees for healthcare. To further control costs, some employers may reduce benefits to employees in their plans:
“In addition, 44 percent of companies say they will consider reducing health benefits to current employees in response to the ACA.”
As insurance plans are renewed, small businesses are starting to get a picture of how ACA will impact them, although it is not uniform. NJ.com recently reported that:
“A survey of insurers, brokers, and small business owners shows that while sticker shock may be hitting some employers, others actually will benefit from the new law. There are winners and losers, and just how many of each is by no means clear as of yet. But many companies will be facing substantial increases.
“They’ve been all over the map — from a 20 percent decrease to a 100 percent increase,” said Mike Munoz, senior vice president for sales and marketing for AmeriHealth New Jersey, which insures about 13 percent of the state’s small-group market.
Horizon Blue Cross Blue Shield, which covers more than half of the small business market, provided representative examples of three small groups that will net savings of 7 percent to 17 percent off their premiums next year. But in an interview, officials said more than 50 percent of its small-group renewals for January will see rate increases.”
What is clear is that until businesses truly get to grips with what the real impact of ACA will be, they are going to be treading carefully and assessing what they can, and possibly cannot, afford as a result of the Affordable Care Act.