This new report, based on the Empire State Manufacturing Survey of August 2014 and its Business Leaders Survey of service firms, was just issued by the Federal Reserve Bank of New York regarding the Affordable Care Act and how it is creating a marked impression on employer’s healthcare coverage as well as consumer prices and employment.
“How the ACA is affecting businesses and how businesses are responding to the new legislation”:
- Median increase of 10 percent in their healthcare coverage costs from 2013 to 2014, and the service firms reported a 9 percent increase. Both surveys predicted a 10 percent increase in 2015.
- Nearly four in 10 manufacturing firms said Obamacare has increased their per-worker health benefit costs “a little” this year, and 34.9 percent said “a lot.” Among service firms, 38.4 percent said “a little” and 20 percent said “a lot.”
Businesses are responding to the increase in ways that negatively impact workers —
- 60.5 % of manufacturing firms and 54% of service companies said they are making modifications to their health plans.
- 73% are increasing employee contributions, as are 69% of service firms.
- Greater than 84% of manufacturing companies making modifications report that they are raising deductibles, and 78.8% are increasing co-pays.
The survey of service firms that are making modifications found that:
- 76.5% are raising deductibles
- 79.4% are increasing co-pays.
Equally troubling, 21.6 % of manufacturing firms said they are:
- Reducing the number of workers they employ
- 19.3% are raising their proportion of part-time workers
- 19.3% are increasing outsourcing
- 36.4% are raising the prices they charge customers
For service firms, 25 percent are raising prices, and 20.2 percent are increasing their proportion of part-time workers.
A report from the Federal Reserve Bank of Philadelphia showed similar results, with many firms increasing their part-time workers and outsourcing, raising employee contributions to healthcare coverage, deductibles, and co-pays, and 28.8 percent are raising the prices they charge customers.
While it is interesting to read the survey, results were actually quite predictable.
Back in December 2011 I posted this:
Speaking at the RCS Corporation in Aiken, Graham and RCS president Carlos Garcia blasted “Obamacare” for its projected costs to businesses and state governments.
“If it’s fully implemented by 2014, 80 percent of Americans will be on some form of government health care. That will create more debt at the federal level, less choice for patients and higher costs for business,” Graham said. “Medicare will be reduced by $500 million to provide health care for uninsured people, and we shouldn’t expand one while cutting Medicare Advantage, which allows people to expand their coverage.”
Large companies are considering ending their health care for employees because the mandates are so onerous, Graham said. The second largest expense in South Carolina is the funding to match Medicaid. If health care reform continues in its current configuration, Graham said, it will cost $1 billion in matching funds over the next seven years, requiring either higher taxes or reduced spending in education and other needs.
RCS Corporation has seen significant growth over the years, Garcia said, but health care reform will add $1 million to its federal tax bill.
“It will result in higher costs, higher prices for customers, lower revenue and fewer jobs” Garcia said.
Even as far back as 2010, I posted about this as it seemed the writing was on the wall. Why wasn’t it read by our legislators?
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