My first question is: WHERE IS THE MONEY GOING TO COME FROM? Many companies are having to completely redesign their healthcare policies and believe me, there is no simple solution. In fact, the employer mandate portion of this law was actually postponed one year to January 1st, 2015 because companies didn't have a clue of how to implement it.
Let me explain. They will have to provide healthcare to all employees, which they may not have been doing up until now, and this creates an IMMENSE administrative burden. The money has to come from somewhere, and I don't know if the insurance providers will be of much help. Here are a couple scenarios:
1) Employers will reduce each employee's paycheck by a couple bucks in order to provide them all with healthcare benefits. In it's report last week, nonpartisan Congressional Budge Office predicted that the workforce's compensation will decrease by 1% because of the ACA. Thats $70 billion per year!
2) Employers will trim a couple (not really just a couple) "unnecessary" jobs in order to pay for the healthcare benefits.
3) For small businesses, they will just
trim jobs until they only have 50 employees and then they do not have to take
part in this mandate at all! The Motley Fool explains
it nicely:
For
example, a small business with 54 full-time workers could decide that
eliminating five jobs makes more economic sense than paying significantly more
for health coverage or penalties. Another alternative that businesses could
take is to keep employees but reduce their hours to less than 30 per week so
that the workers won't be counted as full-time.
Either way, some people will remain unhappy. Some healthier individuals who treat their body as temples may prefer to be paid a higher salary rather than be given health insurance. Employers may be unhappy with the fact they have to provide healthcare to workers they don't even intend on keeping for too long. For example, many companies utilize the services of temps or temporary contractors. They need the contractors to work on certain projects that mostly always have a start and end date. Large corporations who need these types of workers usually have contracts with staffing firms -- they source and pay the temp workers so that they large corporation doesn't need to. However, these temps still need to be provided with healthcare, according to the ACA. Now it just gets even more confusing.
Staffing firms may have to up the margin for their contracts with large corporations or even pay the temps less. One major consequence is that it will offset the market value of job positions, especially in the tech world where it is very easy to acquire talent overseas in India. Wait a second...isn't this something our government does not want to support? Oh well, I sincerely hope there are better alternatives that will turn up in the course of the next year. I wish all employers good luck... they're gonna need it.
