The Patient Protection and Affordable Care Act (hereafter referred to as the ACA), which was signed into law on March 23, 2010, by President Barrack Obama, presents a new paradigm shift in terms of how employers in the United States proceed in the management of employee benefits (Deloitte, 2013).
Indeed, as suggested in the accruing literature, the ACA generates novel requirements and options for employers’ future benefits decisions particularly in providing affordable insurance coverage to employees and intensifying their access to health insurance either through personal mandate or through already evolving Medicaid expansion programs (Deloitte, 2013; Henry J. Kaiser Family Foundation, 2013; Schuman et al., 2013).
This paper brings the real issues surrounding the ACA and benefits management into the fore by presenting the findings of an interview with the benefits manager of a service-oriented company employing more than 250 full-time workers in the United States.
From the onset, the interviewee agreed that the ACA has the capacity to substantially shift the American workplace and workforce, in large part due to the important obligations that employers are expected to assume to expand employees’ insurance coverage.
The manager acknowledged that health insurance coverage forms a critical component of employee benefits management and that his organization has invested heavily in the development of a comprehensive health insurance plan for all employees.
As acknowledged in the literature, the ACA “requires employers with more than 200 employees to automatically enroll employees into health insurance plans offered by the employer” (Henry J. Kaiser Family Foundation, 2013, p. 1).
As a matter of fact, the interviewee suggested that the company was investing heavily on a policy that will enable the organization to gain access to new avenues to purchase employee health benefits with the view to providing a wider choice of plans and enhanced affordability through more transparent and competitive means.
When asked if the company would be able to adequately cover its employees as demanded in the ACA, the interviewee acknowledged that the Act was shifting healthcare costs to employers rather than encouraging cost-sharing and plan design.
To deal with this scenario, the interviewee hinted that the organization was considering reducing other benefits accruable to employees and also shifting other expenses to employees so that it can have the capacity to provide employer-funded health insurance coverage.
This view is supported in the literature, with the report by Deloitte (2013) acknowledging that a similar employer-sponsored insurance coverage in Massachusetts caused employers to recalibrate “their coverage by scaling back benefits and increasing employee cost-sharing and financial responsibility” (p. 13).
According to the interviewee, reducing other employee benefits to fund the new Act is the only reasonable thing to do for middle-level organizations that neither benefit from the economies of scale open to large organizations nor utilize the various tax credits open to small companies.
Lastly, when asked to state the viability of the ACA in enhancing employee benefits, the interviewee acknowledged that the Act was not justified owing to its adverse effects on overall employee benefits as organizations use available financial resources to purchase health insurance for employees with the view to expanding coverage.
Indeed, the interviewee was of the opinion that some of the provisions of the ACA were making organizations to reduce the monetary allocations earmarked for other benefits to expand health insurance coverage for employees, though this did not translate to improvements in health care delivery or reductions in health care costs.
As indicated in the literature, the Act continues to receive widespread criticism for its incapacity to control health care costs or enhance health care delivery system (Deloitte, 2013; Henry J. Kaiser Family Foundation, 2013), and also for its predisposition to redirect substantial benefits into health insurance coverage at the expense of other equally important issues dealing with employee benefits such as paid leaves, pensions and bonuses (Rosenbaum, Teitelbaum, & Hayes, 2011; Schuman et al., 2013).
Overall, the interview with the benefits manager of the service organization reveals that the ACA has substantially changed the company’s approach to benefits management, particularly in terms of passing on cost increases to employees to minimize or manage overall costs involved in implementing the Act to avoid the stated penalties.
The company is undoubtedly faced with increasing health care costs as it attempts to expand coverage by purchasing insurance and enrolling its employees into available health care plans.
While expanding coverage seems to be a noble objective for the company, it is only fair to suggest that the increase in health care costs is ultimately passed on to employees through benefit restructuring and cost-sharing mechanisms (Deloitte, 2013), implying that other components of benefits management (e.g., pension programs, bonuses, paid leaves) will be adversely affected as employers try to offset increasing health care costs.
The cumulative effect of this scenario is that most employers may be unable to attract and retain qualified and skilled employees due to failure to provide a variety of benefit packages. Consequently, the government needs to come up with ways and avenues to absorb some of these costs and ensure that the capacity of organizations to continue providing a whole range of employee benefit packages is not compromised.
References
Deloitte. (2013). Health care costs, benefits, and reform: What’s the next move for employers? Results of Deloitte’s 2013 survey of U.S. employers. Web.
Henry J. Kaiser Family Foundation. (2013). Summary of the affordable care act. Web.
Rosenbaum, S., Teitelbaum, J., & Hayes, K. (2011). The essential health benefits provisions of the affordable care act: Implications for people with disabilities. Web.
Schuman, I., Lotito, M., Friedman, S., Hartstein, B., Jackson, L., & McCutchen, T. (2013). The labor, employment and benefits law implications of the affordable c are act: Are you prepared? Web.