Firms passing higher healthcare costs from ACA on to employees and limiting plan eligibility

October 1, 2014

Employers are attempting to mitigate rising costs resulting from the ACA by shifting them to employees, according to a new survey from the Darla Moore School of Business at the University of South Carolina.

 


Employers are attempting to mitigate rising costs resulting from the Affordable Care Act (ACA) by shifting them to employees, according to a new survey from the Darla Moore School of Business at the University of South Carolina.

The survey queried 560 chief human resource officers (CHROs) from Fortune 500 companies. Of 216 respondents, 78% reported that their health insurance costs have gone up in the wake of the ACA, and 73% have moved or will move employees to Consumer Directed Health Plans.

In addition, 71% have or will raise employee contributions toward health insurance, 30% will move their pre-65 retirees to ACA exchanges, and 27% have or will cut back health insurance eligibility.

The study probed respondents on several promises made by ACA proponents to see if they have materialized, including the premise that its implementation could slow the escalating cost of healthcare in the U.S.

"The Affordable Care Act is a huge public policy issue. Up to now there has been only speculation as to its impact on business and workers," said study author Patrick Wright, professor in strategic human resource management at the University of South Carolina. "This survey provides the facts about that impact and specifics on changes to employment practices as a result."

The majority of respondents reported no change from the ACA on the quality of healthcare and quality of health delivery.

Regarding the ACA’s impact on costs, the majority of CHROs said the law has had no impact on labor costs. But as a group, they reported an average 7.73% increase in health insurance costs directly attributable to its implementation.

 

Seeking to mitigate those costs, 87% of employers say they have taken at least one action to reduce them, including requiring larger employee contributions.

CHROs report rigorously enforcing the number of hours that part-time employees work. “When we put the limit at 30 hours, we frequently had people that worked 32-34 hours, and if enough of them did so, it would put is at legal risk for fines,” said one respondent.

Twelve percent plan to increase the proportion of part-time workers, and 10% will limit the number of full-time hires.

The annual survey, known as the HR@Moore Survey of Chief HR Officers, was initiated in 2009.

Wright says the impact on the overall quality of care remains to be seen. "It's still early in its implementation. It may take a few years before we see those impacts come through the healthcare system."