Multiple economic surveys from the Federal Reserve show ACA is harming business, trend developing?
MacIver News Service | August 28, 2014[Philadelphia, Penn…] A new survey from the Federal Reserve Bank of Philadelphia shows nearly one in five manufacturers are employing fewer people because of Obamacare. Three other Federal Reserve business surveys, two from New York and one from Dallas, show that the damaging effects of the ACA are not limited to Philadelphia and could devastating to businesses nationwide.
The Philadelphia bank’s 2014 Business Outlook Survey gauges the strength of the manufacturing sector in the Third Federal Reserve District of Delaware, New Jersey and most of Pennsylvania. The Business Outlook Survey has been circulating since 1968 and is widely adhered to for economic insight.
August’s survey featured questions about how the Affordable Care Act (ACA) has changed business practices for the participating manufacturing firms. The results are troubling.
More than 18 percent of respondents said they employ fewer people because of the ACA, and another 18.2 percent said the law has forced them to increase part-time workers.
Nearly 14 percent said their amount of outsourced production is higher, and a full 28.8 percent of firms said prices that they charge are now higher than before the ACA.
The ACA’s new regulations for businesses with more than 50 employees mandate that those businesses provide each full-time employee with “affordable” health care coverage. “Affordable” means two things: first, the health care coverage must not require more than 9.5 percent of the employee’s income, and second, no less than 60 percent of health care expenses must be covered by the plan.
If a company violates either of the health coverage requirements, they face thousands of dollars in fines.
Many have claimed this policy will cause health care costs to skyrocket as the government takes sole discretion over what kind of coverage is acceptable.
Over half of survey respondents said they have changed their health care policies as a result of the law.
The average amount of full-time and part-time employees reported among the firms responding was 247, and only 5.8 percent were part-time. This means that many of the firms surveyed would be subject to the ACA’s requirement for larger businesses.
Of those companies making health care changes, an overwhelming majority indicated that employee contributions, deductibles, co-pays, and out-of-pocket maximums are higher as a result of the ACA. A staggering 41.2 percent also said that the “range of medical coverage has decreased,” compared to just 2.9 percent saying medical coverage was better.
Two other Federal Reserve branches released business surveys in August with nearly identical results on the costs of the ACA.
Answers to the New York Federal Reserve’s Empire State Manufacturing Survey and Business Leader Survey indicate that businesses are seeing yearly increases in health coverage cost per employee at a median of 10 percent. That means health care costs will go up by half in just five years for many New York businesses.
70 to 82 percent of respondents to both New York surveys said health care costs will increase next year because of the law, including 51 percent of manufacturers who said they will increase by “a lot.”
Dallas Federal Reserve’s Texas Manufacturing Outlook Survey shows the ACA driving up employee health care costs next year by “a lot” for 54 percent of respondents.
An even higher amount of respondents in the Texas and New York surveys are cutting jobs, shifting employees to part-time, and decreasing wages and benefits because of Obamacare.
If the results from the surveys are a nationwide trend, it could spell bad news for Wisconsin, where manufacturing makes up 16 percent of the workforce and was 21 percent of Gross State Product in 2013.
While President Obama’s signature law was supposed to make health care more affordable, these surveys show that may not be the case. However, the Obama administration has yet to make any public statements responding to the Federal Reserve surveys.