Affordable Care Act Is Shaping Manufacturers' Workforce Strategies
August 6, 2013
Many parts of the Affordable Care Act (ACA) have already gone into effect, while others continue to roll out. Congress continues to struggle in vain to repeal some or all of the ACA. As the federal health care reform moves ahead with implementation, businesses are showing increasing concerns about the costs and administrative burdens of the new requirements. The most recent National Association of Manufacturers (NAM)/IndustryWeek Survey of Manufacturers Research by the Manufacturers Alliance for Productivity and Innovation (MAPI) underscores the findings of the NAM study. MAPI's June survey Employers that don't offer health care benefits to their workers can direct them to state-level competitive exchanges, or Health Insurance Marketplaces Donald Norman, senior economist at MAPI, told IMT that health care reform is creating considerable uncertainty among manufacturers. "For years now they have been watching health care costs rising steadily," he said in an interview. "Companies are looking for ways to try to gain control of that trajectory." Norman added, "What came out of our survey is that manufacturers are standing on the sidelines taking a look. They really don't know how it's going to play out. They're afraid to make a move." The uncertainty is especially vexing for smaller manufacturers whose workforces are near the crucial cutoff of 50 employees, where the ACA kicks in. The ACA includes a provision for an Employer Shared Responsibility Payment Employers below the 50-FTE cutoff have to think about the implications of growing their workforces. Some are reportedly holding back on expansion plans Norman told IMT that the aforementioned exchanges are another source of uncertainty for manufacturing employers. "They don't know what the exchanges are going to be like," he said. "If they abandon their plan and send employees to the exchanges, what kind of health care are they going to get? A number expressed concern about their ability to attract the type of talent they need to compete in a global marketplace." The President's Council of Economic Advisers recently announced Krueger asserted that this slowdown "is consistent with a broad array of other evidence suggesting that the growth rate of health care costs is slowing." The growth rate for employee health insurance slowed from 2.2 percent per year for the period 2006 to 2009 down to 1.8 percent for 2009 to 2012. The news was even better for smaller establishments, he wrote: "For establishments with fewer than 50 employees, employers' real costs for workers' health insurance grew just 1 percent." Krueger attributes this slowdown to "structural changes" in health care and says the ACA will make things even better. Norman admitted that "health care costs have in fact risen less rapidly in the most recent year." But he insisted that this is a data point, not a trend. The longer-term trend shows increasing costs. "Employers have got to be convinced they can get a grip on this. It's a big part of the compensation package," he said.