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Impact of the Reform Law on Employment

By September 25, 2014Commentary

The Congressional Budget Office has said that the reform law is likely disincenting work and leading to more part-time employment.  Most economists agree.  A new survey of Human Resources departments by the business school at the University of South Carolina provides some direct evidence of the actual impact.  (SC Brief)  The survey has been conducted since 2009 and this year covered 213 respondents, mostly from large companies.  In general, the respondents said that the health law had directly led to about a 7.7% increase in health care costs and 5.6% rise in overall labor costs, although only 37% of the firms said they had seen an increase in labor costs while 78% said health spending had risen.  Many respondents also felt that the reform law had decreased health care quality.  Almost no employees indicated an intent to move employees to the public exchanges, but 11% either do or are planning to use a private exchange.

Around 73% of respondents said their company either already had or was planning to move employees to high-deductible plans with savings accounts and 71% said their either had or would raise employee contributions to premiums.  Only 27% said they had or planned to cut back coverage eligibility for spouses or dependents.  In regard to employment related actions, surprisingly only 12% said they would be increasing the proportion of their workforce that is part-time, and only 12% said they planned to cut back part-time employees’ hours; although 23% said they were more carefully ensuring that part-time employees worked less than 30 hours a week.  About 10% are limiting the number of full-time hires as a direct result of the reform law.  The cost impact of the law is clear, but employees are bearing the brunt, not the firms.  And the direct employment effects are muted, but even a small number of large employers taking these actions can affect a large number of people.

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