As individual freedom lovers come to grips with the reality that the Affordable Care Act (ACA) just might become the rule of the land, a more neutral topic is to anticipate the impact of the current debate on what might occur down the road in the world of work. While for many, the ACA is too complex and overreaching to be the “right” solution, it does contain some features that policy makers from both sides of the aisle have embraced and will likely end up somewhere in the final solution, regardless of the outcome of the ACA as currently crafted. One of those provisions is a side product of the individual mandate which is the increased portability of insurance coverage – insurance policies purchased more and more by individuals, not employers.
For those of us in the flexible labor industry, we predict that individual mandates will actually create more demand for employees who want to move more freely from job to job – the types of employees we represent.
How many people do you know who take new jobs or stay in the jobs they have just because of the health benefits? Because individual health insurance policies are expensive and paid for with after tax dollars, most employees don’t even consider the option of purchasing healthcare insurance on their own, relying instead on the healthcare plans selected by their employers.
One of the components of the ACA is a provision that by 2014, each state will have created health insurance exchanges to offer “affordable” alternatives to individual and company-sponsored insurance plans. While the jury is still out as to whether or not tax subsidized premiums can ever be “affordable,” or if government should be empowered to set insurance coverage standards, both conservatives and liberals see value in individually purchased insurance options that would make employees better consumers – less dependent on their employers for healthcare coverage.
Some predict that the shift from employer to employee purchased insurance coverage will free up employees to move more fluidly between jobs and careers. One of the biggest hurdles we face in the temporary and contract help industry, for example, is providing our interim workers with access to reasonably affordable insurance coverage. Any policy or business practice that expands insurance options for mobile employees is good for our business.
Will fewer concerns about getting access to healthcare coverage create higher levels of turnover? Less retention? More fluidity in how people move from job to job? Right now, there are large numbers of job vacancies in certain job categories and/or geographies, and yet the mobility within the existing workforce is at an all-time low. Having portable benefit packages that stay with the person, not go with the job, is one of the ways this issue might be addressed.
The Strategies Used to Attract and Retain Your Best Employees…
may no longer include the quality of your healthcare benefit plan. One of the side products of an ACA implementation is the “sameness” of all insurance policies that will evolve out of the high costs of meeting government mandates. This means fewer choices for both consumers and employers.
High value plans, for example, are targeted to be excessively taxed, and by most accounts, will simply go away or becomes fully employee funded. Even if the ACA is repealed and we move to a more free market alternative, many of the social policy solutions (coverage for preexisting conditions, for example) will likely stand, and must be funded by limiting consumer options in other areas.
In 2010, two thirds of the employers surveyed in a Towers Watson study said that they plan to continue to sponsor health care plans for the foreseeable future – primarily as a way to compete for the best talent. If the government is given the right to dictate what services all qualified benefit plans must cover, that competitive landscape will change. And for some employers the lure of low cost insurance packages available through the state exchanges will be compelling. These employers will simply opt for the lower cost solution – abandon current coverages, pay the penalties (oops taxes).
More Temporary and Contract Workers – But at What Cost?
Anytime the costs or complexity of hiring and retaining core employees increases, the popularity of temporary and contract staffing solutions increases. Although the provisions of the ACA applies to temporary and contract workers in the same way it applies to core workers, we suspect employers will increasingly turn to professional staffing companies as their labor source as a way to avoid the complexity of administering the provisions of the ACA on their own.
Make no mistake, the ACA is complex, and for any form of flexible, part-time, or interim work requirement, it is likely going to be too complex to warrant an employer’s time to figure it out. The temporary and contract staffing industry has been preparing to implement the provisions of the ACA since it first passed in 2010, and while it isn’t going to be easy, by 2014, we will be “ready to go.”
As for lowering employer costs, not so much. Many of the healthcare plans currently provided to temporary workers will be replaced by more expensive plans to meet government regulations. Some staffing companies will simply elect to pay the penalties and eliminate coverage altogether. Still other staffing companies will elect to abandon current programs but increase their employee’s pay to allow them to purchase coverage through their state exchanges.
All options will increase your staffing providers’ direct costs, and for most at a rate they cannot afford to absorb, making these increases pass-throughs to their clients. We are beginning discussions now to prepare our clients for what lies ahead in price adjustments created by the mandates associated with ACA.
The Employer’s Role in Healthcare.
If who pays for healthcare insurance shifts from the employer to the employee, the question becomes what role will the employer play in terms of influencing their employee’s healthcare habits? What becomes of all the wellness programs, lose weight, stop smoking campaigns that have become so popular amongst US businesses?
One of the primary criticisms of the ACA is the claim that it does nothing to address the fundamental issue of our current healthcare system which isn’t access to healthcare services, but the high costs associated with unhealthy life style choices. While the political hot potatoes of who should have what entitlement and if government or the private sector is best equipped to set healthcare standards, remain the focal points of public debate, critics of the ACA are pointing out that it fully misses the cost containment issue.
This means that even if the ACA escapes the repeal promised by Republican campaigners, there will be an ongoing need for the key stakeholders in healthcare – employers included – to continue to help all Americans learn to eat better, exercise more, and make personal decisions to minimize stress. Even though employers no longer have an immediate stake in the costs of providing healthcare, our guess is that the good health of an employer’s workforce will continue to be an issue that employer’s will want to address.