The rising cost of health care stemming from the Affordable Care Act is leading to job cuts at some companies, a new study finds.
A survey released this week by the Federal Reserve Bank of New York found that almost one out of five companies polled in the manufacturing and service sectors in the tri-state area said they are reducing the number of workers they employ as a result of the effects the ACA has had on their businesses.
The New York Fed surveyed roughly 100 executives from the manufacturing sector and about 150 additional executives from the services sector located throughout New York, Connecticut, and New Jersey earlier this month.
The New York Fed found that 20.9% of manufacturing companies said they are reducing their workforces as a result of the ACA, compared to 4.7% of executives who said they are increasing the number of workers they employ. Only 16.8% of service sector businesses said they are cutting jobs, while less than 1% are growing their workforces. Almost a quarter of manufacturing executives surveyed said they are reducing their workers’ wage and salary compensation due to ACA, while more than 20% are trimming other benefits, including retirement.
Roughly 60% of the survey’s respondents said they will make at least some changes to their employees’ current health care plans in response to the ACA, from minor modifications, such as raising deductibles or higher out-of-pocket costs, to switching insurance providers. A significant majority of the companies surveyed, though, said they have no plans to reduce the percentage of employees covered by health benefits or to change the size or breadth of their health care plans.
The executives surveyed said they saw an 8.5% increase this year in health care costs while predicting a 10% bump in 2017. Coins2Day has previously written that health care costs are expected to surge in 2017 when various ACA provisions meant to counteract uncertainty in the insurance market could expire, resulting in higher premiums. Earlier this year, President Barack Obama published a scholarly article in which he outlined various reforms for the ACA, which is one of his administration’s signature pieces of legislation, including creating a “public option” plan and taking steps to combat higher premiums and drug prices.