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Critics of the ACA highlight several concerns, however, with the way that the law affects their businesses. For the 10,000 or so employers over 50 people who do not offer insurance, the cost per worker increases immediately. For companies just under 50 employees, this cost could even result in delayed expansion -- though arguably if their numbers are that tight they probably shouldn't expand anyway. That said, some surveys indicate that 90% of employers feel their health care costs are going to increase with the law. Those costs will largely be passed onto customers. Other employers have threatened to convert full-time employers to part-time, or otherwise reduce their FTEs (full-time equivalents) in order to lower their burdens under the law. The Congressional Budget Office, a politically-neutral entity -- has estimated that the Act might cost the U.S. economy up to 800,000 jobs by 2020 (House Oversight Committee, 2012). Libertarian think tanks like the Heritage Institute also raise ideological objections to the Act, noting that it increases government involvement in the health care system, to the detriment of millions of Americans; some benefit, they argue, but at costs paid by others (Heritage Foundation, 2013).
For businesses, it is recommended that they analyze the role that health care coverage plays in their recruitment strategies. Some companies might benefit from no longer offering health care coverage to their employees, but it is important for the company to understand that decision not only from a financial viewpoint but from a recruitment and retention viewpoints as well. It should be a priority of Human Resources departments to study how the Act will affect their company specifically, and to make recommendations to their executive teams based on that careful analysis of the different costs and issues.
In a more general sense, there appears to be significant risk that the Act will stifle hiring, at least in the short run, and could also have a negative impact on the U.S. economy as a whole (NFIB, 2012). Any broad-based economic impacts will need to be accounted for when firms are making demand projections and when they are performing capital budgeting analysis of proposed projects.
To this end, the firm will probably want to revise its domestic demand forecasts downward. If the Act does indeed begin to cost the American economy thousands of jobs, the combination of this and the Budget Control Act could dramatically weaken existing projections for the health of the American economy going forward. The Affordable Care Act is unlikely to affect foreign operations.
It is also worth making a recommendation with respect to how the health insurance business in general will be affected by the Act. Some provisions of the Act, in particular the mandate banning discriminatory coverage for those with pre-existing conditions, will affect the way that the insurance companies do business. While such coverage will benefit some of our employees who are currently either excluded from the company plan or whose presence on the plan costs the company extra, insurance companies in general are expected to raise rates in response to this mandate. While the Act does set a cap on insurance premiums for individual and family plans for employees, those caps are in excess of $10,200 for an individual plan and $27,500 for family coverage (Klein, 2012). If our plan even comes close to this level, we may be forced to scale back the benefits that the plan offers to something closer to the bare minimum allowable without penalty under the ACA. As noted above, such changes would have to be made in the context of overall recruitment and retention policy.
A final recommendation is to monitor how other organizations are going to react to the Act. We must understand that the ACA changes certain dynamics within American business. It will change the way that insurance companies interact with their customers, and it will change the way that companies compete with each other for talent. So in addition to expecting the worst with respect to the economic impacts of the Act, we should monitor the marketplace with respect to HRM, and ensure that our policies always make sense in light of the changing dynamic. In particular, the balance between what it costs us to provide health care coverage to our employees should be weighed against the cost of the responsibility fee, and the dynamics of recruitment. It is therefore recommended that a team is created within the HRM department to not only implement the ACA in our organization -- a small task since we provide our employees with health coverage -- but also to monitor to way that the businesses around us are dealing with the ACA, so that any issues can be identified and addressed in a proactive manner.
Health Care.gov (2013). Small businesses and the Affordable Care Act. HealthCare.gov. Retrieved March 5, 2013 from http://www.healthcare.gov/law/information-for-you/small-business.html
Heritage Foundation. (2013). The impact of Obamacare. Heritage Foundation. Retrieved March 5, 2013 from http://www.heritage.org/research/projects/impact-of-obamacare
House Oversight Committee. (2012). Examining the impact of Obamacare on job creators and the economy. Committee on Oversight & Government Reform. Retrieved March 5, 2013 from http://oversight.house.gov/hearing/examining-the-impact-of-obamacare-on-job-creators-and-the-economy/
Kaiser. (2013). Employer responsibility under the Affordable Care Act. Kaiser Family Foundation. Retrieved March 5, 2013 from http://healthreform.kff.org/the-basics/employer-penalty-flowchart.aspx
Klein, E. (2012). 11 facts about the Affordable Care Act. Washington Post. Retrieved March 5, 2013 from http://www.washingtonpost.com/blogs/wonkblog/wp/2012/06/24/11-facts-about-the-affordable-care-act/
NFIB. (2012). PPACA employer mandate penalties -- an NFIB crib sheet. National Federation of Independent Businesses. Retrieved March 5, 2013 from http://www.nfib.com/research-foundation/cribsheets/employer-mandate
QuickMBA. (2010). Porter's diamond of national advantage. QuickMBA. Retrieved March 5, 2013 from http://www.quickmba.com/strategy/global/diamond/
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