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The Affordable Care Act’s Effects on U.S. Employment

, The Affordable Care Act’s Effects on U.S. Employment

The Affordable Care Act of 2010 represents the most significant U.S. healthcare reform in decades, but is also one of the most divisive bills ever to be signed into law. Opponents cite the law’s insurance mandate, which obligates employers with over 50 employees to provide health insurance coverage for their employees. Though this mandate has been delayed to lessen its impact on U.S. small businesses, the mandate itself has had rippling effects throughout public and private sectors. Many companies, such as Darden Restaurants (the managing company for Red Lobster), have explicitly stated their intent of hiring more part-time workers to bypass the Affordable Care Act’s intended effect of offering health insurance to all full-time employees.

It is no secret that employer healthcare costs, especially for small businesses, can adversely affect growth. These small businesses do not have the luxuries of long-standing loans, huge labor pools, and branches in many different economic climates that larger companies typically have. Thus, small businesses cannot absorb market cost changes with nearly the same resiliency. Small wonder that small business owners are reluctant to accept a mandate that will seemingly make it more difficult for them to hire more employees, or possibly even hang on to the employees they already have.

According to the Congressional Budget Office, however, the projected cost of the Affordable Care Act over the years of 2014-2019 is estimated to be $439 billion. While this may seem like a tremendous amount of money (and indeed it is), it pales in comparison to the estimated $116 trillion United States Gross Domestic Product over the same period of time. To put it simply, the Affordable Care Act represents a less than 1% spending increase for the entire U.S. economy.

Despite this knowledge, many U.S. small business owners are not comforted. Approximately 75% of U.S. companies have fewer than 50 employees, signifying that they would not be obligated to provide health insurance coverage under the Affordable Care Act. The law itself is designed to address this gap in coverage, as employees of larger companies often have access to extensive health coverage for themselves and their families. The larger effects of the employer insurance mandate have yet to be realized, due to its delayed implementation. At the very least, small business owners will have to restructure their workforces to allow for the possibility of full-time workers with benefit coverage, something that heretofore has been quite uncommon at larger chain stores.

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