For many of its largest critics the ACA represents an unwarranted government takeover of the nation’s health care system. In fact, the 2010 law assures that employer-provided private insurance will continue to play the central role in providing health coverage for working age Americans and their dependents. In many ways the law is designed to preserve employer-sponsored insurance by making it more comprehensive, less expensive and more equitable than the system that existed when the law took effect. An inevitable result of the law is that it raises the cost of providing health insurance for some employers. One complaint of the law’s critics is that the added costs imposed on these employers will cause them to cut their payrolls or change employee’s schedules in order to minimize the law’s effect on the bottom line.
Quite the contrary….if the ACA has had any impact at all on employment numbers, it has helped more individuals become insured….in and out of the workforce.
There are three legal aspects to the ACA…
- The tax penalty imposed on Americans who are offered an affordable health plan but do not purchase one;
- The requirement that states broaden eligibility requirements for the federal-state Medicaid program;
- The legality of insurance subsidies provided to Americans who obtain insurance through federally organized state-level exchanges.
Medicaid eligibility expansions and the subsidies for coverage obtained through state-level insurance exchanges are key elements of the ACA that were intended to expand health coverage.
All the evidence on insurance coverage suggest these provisions have been successful in boosting the insured population and reducing the ranks of the uninsured. Some of the increase in coverage, however, is due to a change in mandated coverage under employer-sponsored plans. Since 2010 health plans that offer dependent benefits have been required to make coverage available until a child turns 26. The Department of Health and Human Services estimates that this provision enabled an additional 2.3 million adults age 25 and younger to enroll in an insurance plan.
The ACA established minimum standards on the health insurance provided under employer-sponsored plans. Some requirements increased the cost of providing health coverage for larger employers (those with 50 or more full time equivalent workers). Employers that did not previously offer a plan for their employees are now required to offer one or to pay a sizeable financial penalty. Employers that offer parsimonious plans or plans that require heavy premium contributions from employees also face financial penalties.
There has been an ongoing fear that higher employer costs would curb hiring or induce some employers to create part-time rather than full-time positions. While the fear is understandable, it is not clear whether the higher cost associated with improved insurance would be borne exclusively or even substantially by employers. Except in the case of minimum-wage workers there is considerable evidence that most employer costs associated with health insurance are passed along to workers in the form of lower wages. Because workers place high value on the insurance benefits they receive, there is good reason to expect the additional cost of health benefits to be borne mainly by workers rather than employers.
It may be a tad bit hard to evaluate the impact of the ACE on overall employment or on employee work schedules because the health law was passed in the middle of the worse economic downturn since the Great Depression. In the month the ACA was signed into law, the overall employment rate was 9.9% and payroll employment was a bit less than 130 million. As I write this, overall unemployment is now at 4.9% (close to ‘true’ unemployment’) and employers have boosted their payrolls by an additional 14 million. The pace of job growth has actually increased in the past 1.5 years as the Administration began to enforce the employer penalty provisions of the law. Of course, the drop in unemployment and rise in payroll jobs might have been even faster if the ACA had not passed. We may never know but I think that some ‘think tank’ will do a study….eventually.
Nevertheless, it is not easy to make a convincing argument that ‘job gains’ have lagged since the President signed the health insurance law into place.
Before the end of the week, I will write about the impact the ACA has had on the part-time vs. full-time job marketing. If you would like to see the full report to which I'm referencing, please follow the link to the Brookings’ Institute analysis. If you have any questions, please contact Rosanne Bennett at email@example.com or at 484-947-7063.