Economic Development, Government, and Health Care

Employers complying with ACA mandate

But firms are cutting hours to part time and passing on more health care costs to employees.

January 15, 2016
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(As seen on WZZM TV 13) A survey of local employers revealed they are not choosing fines over providing health care to employees under the Affordable Care Act, but whether that continues remains to be seen.

Leslie Muller, professor of economics at Grand Valley State University, said a survey of 200 area businesses was conducted to find out whether those businesses offered employees health insurance in 2014 and 2015.

Muller said with the ACA’s employer mandate recently going into effect, researchers wanted to see how employers were responding.

“Would firms increase health insurance offerings or, because the penalty is lower than the cost of offering insurance, would they drop plans?” she asked.

Muller presented some of the key survey findings during the West Michigan Healthcare Economic Forecast, held earlier this month at GVSU.

She said so far Michigan employers are not dropping plans as a result of the ACA mandate, noting that reaction is consistent with how employers are responding in other states.

Whether employers might be more likely to drop health insurance plans and pay the penalty instead if the economy flounders is still to be seen. But, when asked about future plans, Muller said, the majority of employers said they expect to continue offering health insurance.

One thing that has been happening for the past two years, she said, is more employers are transitioning full-time employees to part time.

“We did see about a quarter of firms that were lowering their hours to keep workers under the full-time threshold,” she said.

“We’ve seen that a lot nationally, as well. Two years ago that was also the case, about 20 to 25 percent before the employer mandate.”

That trend may continue. Muller said 20 to 25 percent of the firms surveyed said they are considering cutting full-time hours to part time.

Muller said of employers offering health insurance, many have moved to high-deductible plans.

“About a third only offer a high-deductible plan,” she noted.

She said that is also consistent with what is happening across the country.

She said firms are looking at cost-containment strategies, and high-deductible plans are one tool they are using, as well as passing along more costs to employees and making prescription drug plan changes.

She also said companies are becoming more interested in private exchanges.

“A couple of years ago, firms had no idea what that was,” she said. “Now we see 3 percent using a private exchange and quite a large percentage, 40 percent, considering using a private exchange.”

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